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.