U.S. Stocks May Show A Lack Of Direction In Early Trading

After moving notably higher over the two previous sessions, stocks may show a lack of direction in early trading on Thursday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures down by just 13 points.

Traders may take a step back to assess the outlook for the markets after the advance seen during yesterday’s trading lifted the major averages to their best levels in over a month.

Lingering uncertainty about corporate earnings may also keep traders on the sidelines, with a slew of big-name companies due to report their quarterly results in the coming days.

The Federal Reserve’s monetary policy decision next week also continues to weigh on investors’ minds amid concerns aggressive interest rate hikes could tip the economy into a recession.

Earlier this morning, the European Central Bank announced its decision to raise interest rates by 50 basis points, marking the first rate hike in over a decade.

“The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalisation path than signalled at its previous meeting,” the ECB said.

On the U.S. economic front, the Labor Department released a report unexpectedly showing another modest increase in first-time claims for U.S. unemployment benefits in the week ended July 16th.

The report showed initial jobless claims crept up to 251,000, an increase of 7,000 from the previous week’s unrevised level of 244,000. The uptick surprised economists, who had expected jobless claims to edge down to 240,000.

Jobless claims inched higher for the third straight week, reaching their highest level since hitting 265,000 in the week ended November 13, 2021.

A separate report released by the Federal Reserve Bank of Philadelphia showed regional manufacturing activity unexpectedly contracted at a faster rate in the month of July.

The Philly Fed said its current general activity index slumped to a negative 12.3 in July from a negative 3.3 in June, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to rebound to a positive 0.4.

Not long after the start of trading, the Conference Board is scheduled to release its report on leading economic indicators in the month of June. The leading economic index is expected to decrease by 0.5 percent in June after falling by 0.4 percent in May.

Stocks fluctuated over the course of the trading session on Wednesday but maintained a positive bias throughout the session before closing mostly higher. The major averages extended the rally seen on Tuesday, reaching their best closing levels in over a month.

The major averages all finished the day in positive territory, although the tech-heavy Nasdaq outperformed its counterparts by a wide margin.

While the Nasdaq surged 184.50 points or 1.6 percent to 11,897.65, the S&P 500 climbed 23.21 points or 0.6 percent to 3,959.90 and the narrower Dow edged up by 47.79 points or 0.2 percent to 31,874.84.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.4 percent, while China’s Shanghai Composite Index slumped by 1 percent.

The major European markets have also turned mixed on the day. While the French CAC 40 Index has advanced by 0.8 percent, the U.K.’s FTSE 100 Index is down by 0.2 percent and the German DAX Index is down by 0.5 percent.

In commodities trading, crude oil futures are plunging $3.54 to $96.34 a barrel after slumping $1.96 to $102.26 a barrel a barrel on Wednesday. Meanwhile, after falling $10.50 to $1,700.20 an ounce in the previous session, gold futures are sliding $7.20 to $1,693 an ounce.

On the currency front, the U.S. dollar is trading at 138.33 yen versus the 138.21 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0268 compared to yesterday’s $1.0180.

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