9.35am: Stocks push higher as optimism returns
Investor confidence had returned on Thursday morning boosted by better-than-expected corporate earnings from the likes of Siemens of AstraZeneca, with the three major indices starting the day in positive territory.
Just after the market opened, the tech-laded Nasdaq Composite was leading the charge higher up 128 points or 1.1% at 12,034 points, the Dow Jones Industrial Average had added 227 points or 0.7% at 34,176 points, and the S&P 500 was up 32 points or 0.8% at 4,150 points.
City Index and FOREX.com market analyst Fawad Razaqzada said that it appeared investors were cheering any piece of good news that came their way.
“Today, sentiment was boosted after latest German inflation data showed an unexpected cooling to 9.2%, down from 9.6% and well below forecasts of a return to double-digit inflation of 10%,” he said.
“In addition, the lack of any further negative news encouraged the bears to cover some of their short bets, alleviating pressure from indices and beaten down currency pairs.”
Meanwhile, initial jobless claims for last week came in at 196,000, up from 183,000 a week earlier, above the consensus expectation of 190,000, and marking the first increase in six weeks.
Pantheon Macroeconomics chief economist Ian Shepherdson said that the level of claims remained very low but the numbers were striking as unadjusted claims underperformed, relative to the three most recent years when February 4 fell on a Saturday, the most since early November.
“A single observation proves nothing, but it is striking that this reading comes in the first colder-than-usual week since the polar vortex swept across the country in the week before Christmas,” he said.
Shepherdson added that the strength of January payrolls was due to lower layoffs than usual for the month, and these data support, at the margin, Pantheon’s view that the relatively mild winter weather was a big part of the story.
“Our take on the seasonals suggests that claims will be little changed over the next couple weeks, so further increases in claims would get our attention,” he said.
“The bigger picture here, though, is that the surge in layoff announcements reported in the Challenger survey will pass through into claims by late winter/early spring, allowing for the usual lags.”
6.30am: Weekly unemployment claims also in focus
Wall Street is expected to open higher as investors continue to digest corporate earnings reports and look ahead to weekly jobless claims that are expected to reaffirm a strong labor market in the US.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.7% in Thursday pre-market trading, while those for the broader S&P 500 index gained 0.8%, and contracts for the Nasdaq-100 added 1.2%.
Walt Disney, which reported quarterly earnings after the closing bell, jumped 6.5% in after-hours trading after it announced plans to cut 7,000 jobs as part of a shake-up of the entertainment giant.
Mixed earnings reports saw US stocks closing lower on Wednesday as Federal Reserve officials also emphasised the need for more interest rate hikes to tame inflation.
The DJIA ended 0.6% lower at 33,949, the Nasdaq Composite fell 1.7% to 11,911 and the S&P 500 lost 1.1% to 4,118. Google parent Alphabet sank more than 7% after the company’s AI chatbot answered a question incorrectly in a demonstration.
“Wall Street may have faced something of a shakedown on Wednesday, but sentiment is looking a little more optimistic after traders digested last night’s earnings news,” commented James Hughes, chief market analyst at Scope Markets.
“Futures suggest the Dow is currently on track to more than recover yesterday’s losses and there’s also a general level of support building for the idea that many big tech stocks are moving into oversold territory so could start to attract bargain hunters as they eye the next run higher,” he added.
Hughes noted that a slew of speeches from Fed officials on Wednesday also managed to strike a slightly more balanced tone so while there’s more pain to come, it might not be too onerous.
“Earnings highlights today include PayPal, Phillip Morris, Lyft, Kellogg and PepsiCo whilst economic data is a little more subdued,” Hughes said. “Markets will also be watching whether Alphabet manages to find some upside after yesterday’s AI launch problems.”
Weekly unemployment claims data are forecast to reaffirm a strong labour market. Markets expect initial claims to nudge higher towards 195,000 – admittedly still at very low levels – despite nascent signs of significant job losses as witnessed by job cuts seen across the tech sector, according to TickMill Group market analyst Patrick Munnelly.