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Futures Pointing To Extended Rebound On Wall Street
US Market
The major U.S. index futures are currently pointing to a modestly higher open on Thursday, with stocks likely to extend the rebound from Tuesday’s sell-off seen during Wednesday’s session.
The futures edged higher following the release of a slew of U.S. economic data, including a Commerce Department report showing retail sales fell by much more than expected in the month of January.
The Commerce Department said retail sales slid by 0.8 percent in January after climbing by a downwardly revised 0.4 percent in December.
Economists had expected retail sales to edge down by 0.1 percent compared to the 0.6 percent increase originally reported for the previous month.
Excluding sales by motor vehicle and parts dealers, retail sales fell by 0.6 percent in January after rising by 0.4 percent in December. Ex-auto sales were expected to rise by 0.2 percent.
Treasury yields have moved lower following the release of the report, potentially signaling renewed optimism about the possibility of near-term interest rate cuts.
Meanwhile, the Labor Department released a separate report showing an unexpected decline in first-time claims for unemployment benefits in the week ended February 10th.
The report said initial jobless claims fell to 212,000, a decrease of 8,000 from the previous week’s revised level of 220,000.
Economists had expected initial jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.
The Labor Department also released a separate report this morning showing an unexpected increase U.S. import prices in the month of January.
Stocks showed a strong move back to the upside during trading on Wednesday, partly offsetting the sell-off seen during Tuesday’s session. The major averages all moved higher on the day, with the tech-heavy Nasdaq leading the rebound.
After plunging by 1.8 percent Tuesday’s trading, the Nasdaq surged 203.55 points or 1.3 percent to 15,859.15. The S&P 500 also jumped 47.45 points or 1.0 percent to 5,000.62, while the Dow climbed 151.52 points or 0.4 percent at 38,424.27.
The rebound on Wall Street partly reflected bargain hunting, with some traders seeing the sharp pullback on Tuesday as a buying opportunity amid ongoing optimism about the outlook for the markets.
While hotter-than expected inflation data further pushed back interest rate cut expectations, signs of continued strength in the economy is still expected to benefit the markets in the longer term.
The Federal Reserve is also still likely to begin lower interest rates sometime in the coming months even if traders have to wait until June.
Nonetheless, the major averages remained well off their recent highs ahead of the release of an avalanche of data before the start of trading on Thursday.
Among individual stocks, shares of Lyft (LYFT) skyrocketed by 35.1 after the ride-hailing company reported better than expected fourth quarter results and provided upbeat guidance.
Investing platform Robinhood (HOOD) also spiked by 13.0 percent after reporting fourth quarter results that exceeded analyst estimates on both the top and bottom lines.
On the other hand, shares of Akamai Technologies (AKAM) plunged by 8.2 percent after the server network provider reported better than expected fourth quarter earnings but weaker than expected revenues.
Computer hardware stocks showed a strong move back to the upside on the day, with the NYSE Arca Computer Hardware Index soaring by 3.4 percent to a record closing high.
Substantial strength also emerged among tobacco stocks, as reflected by the 3.3 percent spike by the NYSE Arca Tobacco Index.
Semiconductor, networking and biotechnology stocks also saw considerable strength, contributing to the rebound by the tech-heavy Nasdaq.
Most of the other major sectors also rebounded on the day, with notable strength visible among steel, housing and airline stocks.
U.S. Economic Reports
First-time claims for U.S. unemployment benefits unexpectedly declined in the week ended February 10th, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims fell to 212,000, a decrease of 8,000 from the previous week’s revised level of 220,000.
Economists had expected initial jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.
Meanwhile, the Labor Department said the less volatile four-week moving average rose to 218,500, an increase of 5,750 from the previous week’s revised average of 212,750.
A separate report released by the Commerce Department on Thursday showed retail sales in the U.S. fell by much more than expected in the month of January.
The Commerce Department said retail sales slid by 0.8 percent in January after climbing by a downwardly revised 0.4 percent in December.
Economists had expected retail sales to edge down by 0.1 percent compared to the 0.6 percent increase originally reported for the previous month.
Excluding sales by motor vehicle and parts dealers, retail sales fell by 0.6 percent in January after rising by 0.4 percent in December. Ex-auto sales were expected to rise by 0.2 percent.
The Labor Department also released a report on Thursday showing an unexpected increase U.S. import prices in the month of January.
The report said import prices climbed by 0.8 percent in January after falling by a revised 0.7 percent in December. Economists had expected import prices to come in unchanged, matching the flat reading originally reported for the previous month.
The Labor Department said export prices also advanced by 0.8 percent in January following a revised 0.7 percent decrease in December.
Export prices were expected to edge down by 0.1 percent compared to the 0.9 percent slump originally reported for the previous month.
Manufacturing activity in the Philadelphia area has seen a significant turnaround in the month of February, the Federal Reserve Bank of Philadelphia revealed in a report released on Thursday.
The Philly Fed said its diffusion index for current general activity surged to a positive 5.2 in February from a negative 10.6 in January, with a positive reading indicating growth. Economists had expected the index to rise to a negative 8.0.
Looking ahead, the Philly Fed said the survey’s broad indicators for future activity rose, suggesting more widespread expectations for overall growth over the next six months.
A separate report released by the Federal Reserve Bank of New York on Thursday showed regional manufacturing activity has contracted at a substantially slower rate in the month of February.
The New York Fed said its general business conditions index skyrocketed to a negative 2.4 in February from a negative 43.7 in January, although a negative reading still indicates contraction. Economists had expected the index to surge to a negative 15.0.
Looking ahead, the New York Fed said the six-month outlook improved, though optimism remained subdued.
At 9:15 am ET, the Federal Reserve is due to release its report on industrial production in the month of January. Industrial production is expected to rise by 0.3 percent in January after inching up by 0.1 percent in December.
The National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of February at 10 am ET. The housing market index is expected to increase to 46 in February after jumping to 44 in January.
Also at 10 am ET, the Commerce Department is due to release its report on business inventories in the month of December. Business inventories are expected to climb by 0.4 percent in December after edging down by 0.1 percent in November.
The Treasury Department is scheduled to announce the details of this month’s auction of twenty-year bonds at 11 am ET.
At 1:15 pm ET, Federal Reserve Board Governor Christopher Walleris due to speak on “The Dollar’s International Role” at the Global Interdependence Center and University of the Bahamas Conference: Climate, Currency, and Central Banking.
Atlanta Federal Reserve President Raphael Bostic is scheduled to speak on the economic outlook and monetary policy before the Money Marketeers of New York University at 7 pm ET.
Europe
European stocks have moved higher on Thursday as investors digest a slew of upbeat earnings updates as well as comments by European Central Bank President Christine Lagarde that inflation in the euro zone is heading back towards target.
While the French CAC 40 Index is up by 0.9 percent, the German DAX Index is up by 0.5 percent and the U.K.’s FTSE 100 Index is just above the unchanged line.
The British pound dipped against its rivals after data showed the U.K. economy slipped into a recession in the fourth quarter — bringing forward prospects of interest-rate cuts.
Data from the Office for National Statistics showed that U.K. gross domestic product declined 0.3 percent sequentially, following an unrevised 0.1 percent dip in the third quarter. Economists had forecast another 0.1 percent decrease for the fourth quarter.
Compared to the last year, real GDP declined 0.2 percent in the fourth quarter, confounding expectations for an increase of 0.1 percent.
With U.K. inflation unexpectedly holding steady in January and the economy slipping into a technical recession, traders are now pricing in 70 basis points of cuts from the Bank of England this year, with the first cut expected in June.
In corporate news, Swedish business cloud platform Fortnox has soared after posting fourth quarter results above expectations.
Continental AG has also moved higher. The German automotive supplier announced plans to cut 7150 jobs worldwide by 2025.
Auto giant Stellantis NV has also rallied on share buyback news, while France’s Renault has jumped after it bounced back into profit in 2023 and posted margin and revenue gains.
Spirits maker Pernod Ricard has also surged. The company cut its sales guidance for fiscal 2024 but predicted improved demand in key Chinese and U.S. markets from the second half.
Schneider Electric have also moved to the upside after raising its dividend and predicting increased revenue and earnings this year.
Jet engine maker Safran has also advanced after reporting higher revenue and operating profit for 2023, while British energy supplier Centrica has jumped despite reporting a drop in annual profit.
Commerzbank shares have also risen after the German lender posted fourth quarter net profit that beat estimates. After reporting a 55 percent surge in its fiscal 2023 net profit, the bank said it plans to return a total of around 1 billion euros of capital to shareholders.
Meanwhile, mining giant BHP has fallen after it flagged another $3.2 billion impairment in relation to its Brazilian Samarco dam failure and a $2.5 billion impairment charge for its Western Australia Nickel business.
Asia
Asian stocks advanced on Thursday as calmer bond markets and robust U.S. corporate earnings lifted chip stocks.
Treasury yields fell after Chicago Fed President Austan Goolsbee said on Wednesday the central bank should be wary of waiting too long before it cuts interest rates.
The U.S. dollar eased ahead of key U.S. economic data releases due later in the day and gold steadied near two-month lows, while oil extended overnight losses after a larger-than-expected jump in U.S. crude inventories.
Chinese markets remained closed for the Lunar New Year holiday. Hong Kong’s Hang Seng Index rose 0.4 percent to 15,944.63.
Japan’s Nikkei 225 Index breached a new 34-year peak before closing up 1.2 percent at 38,157.94. The broader Topix Index settled 0.3 percent higher at 2,591.85.
Chip-related shares surged, with Advantest, Screen Holdings and Tokyo Electron climbing 2-6 percent. Brewer Kirin Holdings plunged 4.6 percent after announcing its full-year results.
The yen held near the psychologically important 150 per dollar level as data showed Japanese GDP shrank for the second quarter in a row in the October-December 2023 period, raising doubts about the Bank of Japan’s plans to exit its ultra-easy policy this year.
Seoul stocks edged lower, with the Kospi closing down 0.3 percent at 2,613.80.
Australian markets rose notably after employment numbers came in surprisingly weak in January, reigniting hopes of early rate cuts by the Reserve Bank of Australia.
The benchmark S&P/ASX 200 Index jumped 0.8 percent to 7,605.70, led by banks and information technology firms.
Wesfarmers soared 5 percent after posting a better-than-expected half-year profit. Origin Energy rallied 2.5 percent after posting a 17-fold jump half-year profit.
Mining heavyweight BHP dropped 1.7 percent as it flagged another $3.2 billion impairment in relation to its Brazilian Samarco dam failure and a $2.5 billion impairment charge for its Western Australia Nickel business.
Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index slipped 0.2 percent to 11,640.04.
Commodities
Crude oil futures are slipping $0.19 to $76.45 a barrel after tumbling $1.23 to $76.64 a barrel on Wednesday. Meanwhile, after edging down $2.90 to $2,004.30 an ounce in the previous session, gold futures are climbing $7.60 to $2,011.90 an ounce.
On the currency front, the U.S. dollar is trading at 149.77 yen versus the 150.58 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0764 compared to yesterday’s $1.0727.
