Benzinga - by Shanthi Rexaline, Benzinga Editor.
A somber mood looms over Wall Street, stirred by lackluster earnings reports and relentless bond yield increases. Stock futures dipped early Thursday, with Meta Platforms, Inc.‘s (NASDAQ:META) impressive results failing to satisfy investors.
Market-watchers are also focused on a series of upcoming earnings reports, including Amazon, Inc. (NASDAQ:AMZN), set to release its quarterly results after the market close.
The spotlight, however, is on the third-quarter GDP report, expected to reveal the fastest growth since late 2021. A strong figure could propel bond yields upward and dampen traders’ risk appetite. Furthermore, an important interest rate decision from Europe is on traders’ radar ahead of the Federal Reserve’s upcoming rate decision.
Cues From Previous Session
In Wednesday’s trading, major averages took a hit. Factors like Alphabet, Inc.‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) underwhelming Cloud revenue, surging bond yields, rising oil prices, and robust new home sales for September unnerved traders.
Dow Industrials started the day strong, thanks to Microsoft Corp. (NASDAQ:MSFT) and Coca-Cola (NYSE:KO) shares. However, the Nasdaq Composite and S&P 500 opened weaker and stayed that way, ending notably lower.
By the afternoon, the Dow joined the broader market’s downward slide. The Nasdaq Composite and S&P 500 closed at a five-month low, and small-cap stocks, as represented by the Russell 2000 Index, are now down 5.56% for the year.
Most S&P sector stocks faced declines, primarily in communication services, led by Alphabet. Consumer discretionary and real estate sectors also saw significant selling pressure. Conversely, defensive sectors like consumer staples and utilities resisted the market’s downturn.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -2.43 | 12,821.22 |
| S&P 500 Index | -1.43% | 4,186.77 |
| S&P 500 Index | -0.32% | 33,035.93 |
| Russell 2000 | -1.67% | 1,651.43 |
Analyst Color:
Despite the negative start to the mega-cap tech earnings, an analyst is optimistic about the near term for the market. “This quarter, there's a high bar for mega-cap tech,” said Gina Bolvin. president of Bolvin Wealth Management Group. “This quarter it’s all about expectations,” she added.
Bolvin is, however, optimistic of a fourth-quarter and year-end rally. She premised her optimism on the strong seasonality when 80% of the time the performance is positive. Shrugging off the volatility seen so far in October, the analyst said, “October is usually volatile with the market often recovering mid-month and so usually October is decent after the full days are over.”
The second year of a bull market generates positive returns 100% of the time since 1956 and on average, the gain has been 12.65%, Bolvin said. She also noted that inflation is on its way lower the Federal Reserve is done or almost there and the earnings recession is over.
Futures Today
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.92% |
| S&P 500 | -0.65% |
| Dow | -0.39% |
| R2K | -0.45% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.61% to $415 and the Invesco QQQ ETF (NASDAQ:QQQ) plunged 0.91% to $347.14, according to Benzinga Pro data.
Upcoming Economic Data:
The Bureau of Economic Analysis is scheduled to release the first read of third-quarter GDP data at 8:30 a.m. EDT. Economists, on average, expect the economic growth to come in at a robust annualized quarterly rate of 4.3%, notably faster than the 2.1% rate in the second quarter.
Comerica economist Bill Adams said the growth will likely accelerate to the fastest clip since late 2021 but cautioned of a slowdown in the fourth quarter, weighed down by the UAW strike, the restart of student loan payments, and potentially a government shutdown.
Traders may also keep a close eye on the core price consumption expenditure and the GDP price index, both considered as inflation measures.
The Labor Department is due to release the weekly jobless claims report at 8:30 a.m. EDT. The consensus estimate calls for the number of individuals claiming unemployment benefits to increase from 198,000 in the week ended Oct. 14 to 208,000 in the week ended Oct. 21.
The Commerce Department will release its durable goods orders report for September at 8:30 a.m. EDT. Economists expect durable goods orders to grow 1.7% month-over-month, accelerating from the 0.2% increase in August. Core durable goods orders, which strips out the volatile transportation orders, may have grown at a slower pace of 0.2% compared to the previous month’s 0.4% increase.
The National Association of Realtors is due to release the pending home sales report for September at 10 a.m. EDT. The index is expected to have fallen 1.8% month-over-month following a 7.1% plunge in August.
The Kansas Fed’s regional manufacturing and composite indices are due at 11 p.m. EDT.
The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT and seven-year notes at 1 p.m. EDT.
See also: Futures Vs. Options
Stocks In Focus:
- Ford Motor Company (NYSE:F) rose over 2% in premarket after the confirmed it has reached a tentative deal with the striking United Auto Workers union.
- Mattel, Inc. (NASDAQ:MAT) fell over 10% following the toymaker’s disappointing guidance. Peer Hasbro, Inc. (NASDAQ:HAS) also moved in sympathy.
- O’Reilly Automotive, Inc. (NASDAQ:ORLY) climbed more than 4% following its earnings report.
- Meta slid about 2.7% after the company hinted at some ad softness early in the fourth quarter due to geopolitical tensions.
- Altria Group, Inc. (NYSE:MO), Boston Scientific Corporation (NYSE:BSX), Bristol-Myers Squibb Company (NYSE:BMY), Comcast Corporation (NASDAQ:CMCSA), Hertz Global Holdings, Inc. (NASDAQ:HTZ), Hasbro, Inc. (NASDAQ:HAS), Mastercard Incorporated (NYSE:MA), Northrop Grumman Corporation (NYSE:NOC), Merck & Co., Inc. (NYSE:MRK), Royal Caribbean Cruises Ltd. (NYSE:RCL), Southwest Airlines Co. (NYSE:LUV), STMicroelectronics N.V. (NYSE:STM) and Seagate Technology Holdings plc (NASDAQ:STX) are among the companies due to report their quarterly results before the market open.
- Those reporting after the close include Amazon, Arthur J. Gallagher & Co. (NYSE:AJG), BJ’s Restaurants, Inc. (NASDAQ:BJRI), Capital One Financial Corporation (NYSE:COF), Ford, Intel Corporation (NASDAQ:INTC)” and SkyWest, Inc. (NASDAQ:SKYW).
Crude oil futures fell 1.37% to $84.22 in early European session on Thursday following Wednesday's nearly 2% rally.
The benchmark 10-year Treasury note remained flattish at 4.953% on Thursday ahead of the GDP data.
Asian stocks fell across the board, led by the Japanese, South Korean, Taiwanese, Indonesian and Indian markets. The negative lead from Wall Street weighed down on sentiment, while traders also exercised caution ahead of the U.S. GDP data and another batch of earnings reports. The Chinese market bucked the downtrend amid hopes that the government’s stimulatory measures will kickstart the sagging domestic growth.
European stocks fell by late-morning trading as investors in the region reacted to overseas cues and also waited nervously for the European Central Bank’s rate decision due at 8:15 a.m. EDT. The central bank for the 19-nation eurozone region is widely expected to keep interest rates unchanged at current levels.
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