Benzinga - by Shanthi Rexaline, Benzinga Editor.
Sentiment continues to be tentative as the index futures point to a nervous start ahead of some key economic data. The final second-quarter GDP, jobless claims, pending home sales data, and speech by Federal Reserve officials, including Chair Jerome Powell, could play a part in guiding sentiment in Thursday’s session. The 10-year Treasury yield continues to head northward, potentially pressuring stocks yet again.
Cues From Wednesday’s Trading:
US stocks meandered to a narrowly mixed close on Wednesday as traders reacted to a rise in bond yields and oil’s continued ascent. The major averages opened higher, thanks to better-than-expected headline durable goods orders number, but reversed course immediately after. They declined until late-afternoon trading as the benchmark 10-year Treasury note yield breached the 4.6% handle for the first time since late-August 2007.
The averages cut their losses through the remainder of the session, although closing mixed for the day. The Dow Industrials ended down for a second straight day, while the Nasdaq Composite and the Dow Industrials rebounded from Tuesday’s sharp declines. Small-cap stocks stood out with noteworthy gains for the session.
Among S&P 500 sectors, utility, real estate, and consumer staple stocks led the declines, while a spike in energy stocks helped mitigate some of the weakness.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.22% | 13,092.85 |
| S&P 500 Index | +0.02% | 4,274.51 |
| Dow Industrials | -0.20% | 33,550.27 |
| Russell 2000 | +0.98% | 1,778.90 |
Analyst Color:
The economic outlook is fraught with uncertainties, and against this uncertain backdrop, fundamentally sound stocks are better bets, says fund manager Louis Navellier. “As a result of a lot of chaos and distractions, our best defense remains a strong offense of fundamentally superior stocks,” he said.
Apart from refinery and energy stocks, the fund manager recommended the best AI stocks and companies profiting from the booming demand for weight loss medication, the strong demand for cruising/travel, a potato shortage, and resurging semiconductor demand.
“In other words, stay invested in the best economic hot spots with improving sales and exploding earnings,” he added.
The earnings environment is poised to improve in the next four quarters steadily, Navellier said. “Due to positive analyst earnings revisions in recent months, I am expecting another round of big earnings surprises! In other words, we remain “locked and loaded” for another earnings announcement season,” he added.
Futures Today
Futures Performance On Thursday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.07% |
| S&P 500 | +0.09% |
| Dow | +0.10% |
| R2K | -0.17% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) edging up 0.08% to $426.41, and the Invesco QQQ ETF (NASDAQ:QQQ) slipped 0.05% to $354.87, according to Benzinga Pro data.
Upcoming Economic Data:
The Bureau of Economic Analysis is due to release the final second-quarter GDP data at 8:30 a.m. EDT. Economists, on average, expect the preliminary numbers to be left unrevised at a seasonally adjusted annual rate of 2.1% quarter-over-quarter compared to the first quarter’s 2% rate. Traders may also keep a tab on the inflation components of the report, namely the GDP price deflator and the annual rate of the core price consumption expenditure index.
The Labor Department will release its weekly jobless claims data at 8:30 a.m. EDT. The consensus estimates suggest the number of individuals claiming unemployment benefits may have increased from 201,000 in the week ended Sept. 16 to 215,000 in the week ended Sept. 23.
Chicago Fed President Austan Goolsbee is scheduled to speak at 9 a.m. EDT, followed by Fed Governor Lisa Cook at 3 p.m. EDT and Fed Chair Powell at 4 p.m. EDT.
The National Association of Realtors will release August’s pending home sales index at 10 a.m. EDT. The index is expected to decline 0.8% month-over-month following a 0.9% increase in July.
The Treasury is set to auction four and seven-week bills at 11:30 a.m. EDT and seven-year notes at 1 p.m. EDT.
Stocks In Focus:
- Peloton Interactive, Inc. (NASDAQ:PTON) jumped over 12% in premarket trading after it signed a five-year deal with Lululemon Athletica, Inc. (NASDAQ:LULU).
- Workday, Inc. (NASDAQ:WDAY) plunged nearly 10% after the cloud service provider reduced its subscription revenue growth guidance at an investor presentation.
- Micron Technology, Inc. (NASDAQ:MU) declined over 4.70% after the chipmaker issued lackluster guidance.
- GameStop Corp. (NYSE:GME) rose about 10% after the company announced Ryan Cohen as CEO, effective immediately.
- Accenture plc (NYSE:ACN), CarMax, Inc. (NYSE:KMX), and Jabil, Inc. (NYSE:JBL) are among the companies due to report their quarterly results ahead of the market open.
- Those reporting after the close include Nike, Inc. (NYSE:NKE) and BlackBerry Ltd. (NYSE:BB).
Crude oil futures edged down 0.26% to $93.44 in early European session on Thursday following Wednesday's nearly 3.64% rally.
The 10-year T-note yield edged up 0.01 percentage points to 4.636%.
Most Asian markets declined on Thursday, with Japan and Hong Kong leading the slide. The weakness in Hong Kong reflected negative sentiment generated by the suspension of trading in property giant Evergrande Group (OTC:EGRNF) amid reports that the company’s chairman is under surveillance.
On the other hand, the Chinese market eked out a modest gain. The markets in South Korea and Malaysia remained closed for public holidays.
European stocks were mixed by late-morning trading on Thursday, with fears concerning the rising U.S. bond yields remaining an undercurrent.
Photo by Ground Picture on Shutterstock
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