Benzinga - by Shanthi Rexaline, Benzinga Editor.
Wednesday’s recovery could prove short-lived, going by the trading in stock futures, which points to a slightly lower opening on Thursday. Bond yields continued to ease and oil prices saw incremental weakness, and these could help improve the risk sentiment of traders. Two labor market readings and a few Federal Reserve speeches could offer cues for traders in Thursday’s session, while traders may also keep an eye on how the political drama is playing out at Capitol Hill.
Cues From Wednesday's Trading:
A weak private payrolls report for September and slower service sector activity tempered expectations for future rate hikes, pushing bond yields lower on Wednesday. Taking cues from the development, the stock market rebounded, with technology stocks leading from the front.
The three major averages were firmer at the open. The tech-Nasdaq Composite stayed in the green throughout the session, and the broader S&P 500 Index was higher for much of the session. The 30-stock Dow Industrials average swayed back and forth before ending firmly in the green.
Small-cap stocks continued to see volatility, with the Russell 2000 Index trading mostly lower before sneaking in above the unchanged line in the final few minutes.
Among the S&P sector classes, communication services, consumer discretionary, IT, material and real-estate stocks rallied strongly in the session, while energy stocks served as drags.
US Index Performance On Wednesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +1.35% | 13,236.01 |
| S&P 500 Index | +0.81% | 4,263.75 |
| Dow Industrials | +0.39% | 33,129.55 |
| Russell 2000 | +0.11% | 1,729.01 |
Analyst Color:
The U.S. economy is facing a queer situation of the dollar and crude oil surging in tandem as opposed to the inverse relation they typically share, and this could have a widespread impact across economies, industries, and consumers, said Morgan Stanley’s Lisa Shalett.
U.S. exporters and multinationals could take a big hit from the development, the analyst said. Higher oil prices increase the costs of companies and a stronger dollar makes their products less competitive in the global markets. Higher oil prices also mean pain at the pump, eating into the discretionary spending of consumers, she said.
These have the potential to challenge corporate profits at a time analysts have been boosting their U.S. corporate earnings forecasts, Shalett said. They now anticipate 12% annualized growth through 2025, she added.
“Higher expectations, in the face of mounting risks, may amplify the degree of potential disappointment and related market volatility,” the analyst said.
Futures Today
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.09% |
| S&P 500 | -0.18% |
| Dow | -0.24% |
| R2K | -0.38% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) edged down 0.07% to $424.38 and the Invesco QQQ ETF (NASDAQ:QQQ) edged up 0.01% to $359.80, according to Benzinga Pro data.
Upcoming Economic Data:
The Challenger job cuts report for September is due at 7:30 a.m. EST. The report, compiled by Challenger, Grey & Christmas, provides data on corporate layoffs for a particular month. In August, job cuts amounted to 75,151.
The Labor Department is due to release the routinely scheduled weekly jobless claims report at 8:30 a.m. EDT. The number of individuals claiming unemployment benefits may have risen from 204,000 in the week ended Sept. 23 to 210,000 in the week ended Sept. 30.
The Commerce Department will release the trade balance report for August at 8:30 a.m. EDT. The consensus estimate calls for a narrowing of the trade deficit from $65 billion in July to $62.3 billion in August.
Among the Fed officials due to speak on Thursday are:
- Cleveland Fed President Loretta Mester, a member of the Federal Open Market Committee, at 9 a.m. EDT
- Richmond Fed President Thomas Barkin, also a FOMC member, at 11:30 a.m. EDT
- San Francisco Fed President Mary Daly, also a FOMC member, at 12 P.m. EDT
- Fed Vice Chair for Supervision Michael Barr at 12:15 p.m. EDT
Stocks In Focus:
- Sirius XM Holdings Inc. (NASDAQ:SIRI) fell over 14% in premarket trading
- The Clorox Company (NYSE:CLX) fell nearly 4.5% in reaction to its negative preannouncement.
- Rivian Automotive, Inc. (NASDAQ:RIVN) slumped about 8.5% after the electric vehicle startup announced a $1.5 billion green bond offering.
- Conagra Brands, Inc. (NYSE:CAG), and Constellation Brands, Inc. (NYSE:STZ) are among the companies due to report their quarterly results ahead of the market open.
- Levi Strauss & Co. (NYSE:LEVI) will report its earnings after the market close.
Crude oil futures extended their slide on Thursday, as they were down 1.66% at $82.82 a barrel in early European session. This comes on top of the 5.61% plunge on Wednesday.
The yield on the benchmark 10-year U.S. Treasury note eased 0.016 percentage points to 4.719%.
The major Asian markets ended mostly higher, with the Japanese and Taiwanese markets rallying strongly, while sentiment remained muted elsewhere. The Chinese market remained closed for the weeklong National Day holiday. The cautious mood reflected apprehension ahead of the U.S. non-farm payrolls report due on Friday.
European stocks showed tentativeness in late-morning trading on Thursday.
Read Next: Yield Curve Inversion May Not Predict Recession, But Analyst Says Too Early To Declare ‘All Clear’ On Downturn
This illustration was generated using artificial intelligence via MidJourney.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.