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Profit Taking May Contribute To Early Pullback On Wall Street

The major U.S. index futures are pointing to a lower opening on Thursday, with stocks likely to give back ground after moving sharply higher over the course of the previous session.

Profit taking may contribute to initial weakness on Wall Street after the strong gains posted in the previous session lifted the Dow and the S&P 500 to their best closing levels in nearly a month.

Traders may also look to move money into safe havens ahead of the Federal Reserve's monetary policy announcement this afternoon.

The Fed is widely expected to leave interest rates unchanged, but the accompanying statement may shed additional light on the anticipated rate hike in December.

CME Group's FedWatch tool indicates only a 7 percent chance the Fed will raise rates today but a 75 percent chance for a 25 basis point increase in rates next month.

Stocks showed a significant move to the upside during trading on Wednesday, adding to the gains posted in the previous session. With the continued upward move, the Dow and the S&P 500 reached their best closing levels in nearly a month.

The major averages ended the day just off their highs of the session. The Dow surged up 545.29 points or 2.1 percent to 26,180.30, the Nasdaq soared 194.79 points or 2.6 percent to 7,570.75 and the S&P 500 spiked 58.44 points or 2.1 percent to 2,813.89.

The rally on Wall Street came as the results of the highly anticipated midterm elections on Tuesday came largely in line with expectations.

Democrats are projected to retake control of the House for the first time since 2010, as Democratic candidates managed to flip a number of suburban districts across the country.

Control of the House will give Democrats subpoena power, potentially leading to numerous investigations of President Donald Trump's administration.

House Democrats will also play a much larger role if Trump hopes to achieve any major legislative accomplishments in the next two years.

Meanwhile, Democrats did not fare as well as in the Senate, as Republicans appear poised to expand their majority in the upper chamber.

Republican candidates won Democratic Senate seats in Indiana, Missouri, and North Dakota and are leading in tight races in Florida and Arizona.

The GOP had been seen as likely to maintain control of the Senate due to the tough map faced by Democrats, who were defending 26 of the 35 seats on the ballot.

With Republicans expanding their majority, Trump will likely have an easier time pushing through more controversial judicial nominees.

Despite Republicans losing control of the House, Trump described the night as a "tremendous success" in a post on Twitter.

Software stocks showed a substantial move to the upside on the day, driving the Dow Jones Software Index up by 4 percent. The jump lifted the index to its best closing level in a month.

Considerable strength also emerged among retail stocks, as reflected by the 3.6 percent spike by the Dow Jones Retail Index.

Healthcare stocks also turned in a strong performance, resulting in a 2.9 percent advance by the Dow Jones Health Care Index.

DaVita (DVA) and Fresenius Medical Care (FMS) posted standout gains after California voters rejected a ballot measure that would have capped dialysis payments from insurance companies

Transportation, pharmaceutical, brokerage and chemical stocks also moved notably higher on the day, while gold stocks were among the few groups to buck the uptrend.

Commodity, Currency Markets

Crude oil futures are slipping $0.08 to $61.59 a barrel after sliding $0.54 to $61.67 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,222.90, down $5.80 compared to the previous session's close of $1,228.70. On Wednesday, gold rose $2.40.

On the currency front, the U.S. dollar is trading at 113.70 yen compared to the 113.52 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1424 compared to yesterday's $1.1426.

Asia

Asian stocks ended broadly higher on Thursday after the U.S. midterm elections delivered no big surprises.

While a split Congress is expected to halt any major advances in President Donald Trump's economic agenda, Republicans expanded their majority in the Senate, overcoming historical political headwinds.

Traders looked ahead to the Federal Reserve's monetary policy announcement for new clues as to whether the U.S. central bank will signal a December rate hike.

Chinese stocks fell slightly even as data showed Chinese exports and imports both increased more than expected in October.

China's exports grew 15.6 percent annually, while economists had forecast an increase of 11.7 percent. Imports surged up 21.4 percent compared to the forecast of 14.7 percent. As a result, the trade surplus came in at $34 billion in the month versus the expected level of $35.1 billion.

The benchmark Shanghai Composite Index dipped 5.71 points or 0.2 percent to 2,635.63, while Hong Kong's Hang Seng Index rose 80.03 points or 0.3 percent to 26,227.72.

Japanese shares posted strong gains to hit a 2-1/2-week closing high as investors cheered the U.S. midterm election results. The Nikkei 225 Index jumped 401.12 points or 1.8 percent to 22,486.92, and the broader Topix Index soared 1.7 percent to 1,681.25.

Exporters Canon, Honda Motor and Sony rose 1-3 percent. Banks Sumitomo Mitsui Financial and Mitsubishi UFJ Financial climbed around 2 percent. Toshiba skyrocketed 12.7 percent after it unveiled a new five-year business strategy and announced a share buyback.

In economic news, the value of core machine orders in Japan plunged 18.3 percent sequentially in September, the Cabinet Office said, coming in at 802.2 billion yen. That was well shy of expectations for a decline of 9.0 percent following the 6.8 percent increase in August.

Another report showed that Japan had a current account surplus of 1,821.6 billion yen in September, down 19.3 percent from last year. The trade balance showed a surplus of 323.3 billion yen, shy of expectations for 334.2 billion yen.

Australian markets eked out modest gains, led by healthcare, banking and energy stocks. The benchmark S&P/ASX 200 Index climbed 31.30 points or 0.5 percent to 5,928.20, while the broader All Ordinaries Index ended 0.6 percent higher at 6,015.90.

Healthcare stocks led the surge, with CSL, Cochlear and Resmed jumping 1-2 percent. Energy stocks posted modest gains despite oil prices falling to a nearly eight-month low.

News Corp. surged up 4.2 percent after its fiscal first quarter earnings topped forecasts. REA Group, the owner of real estate portal realestate.com and majority owned by News Corp., soared 8 percent after its first quarter profit rose 23 percent on a 17 percent increase in revenue.

Meanwhile, lender NAB lost 3.6 percent on going ex-dividend, while the other three big banks shot up around 2 percent each after the banking regulator proposed hiking capital requirements.

Mining giant BHP Billiton eased 0.2 percent after it secured exploration blocks in offshore eastern Canada. James Hardie shares slumped 14.7 percent after the building materials group cut its full year forecast range, citing uncertain conditions in its key U.S. market.

Europe

European stocks are turning in a mixed performance as investors turn their attention to a monetary policy announcement from the Federal Reserve due later in the day.

No change in the Fed rate is expected, but traders will be looking for clues as to whether there will be a December rate hike.

While the U.K.'s FTSE 100 Index has risen by 0.4 percent, the French CAC 40 Index is just below the unchanged line and the German DAX Index is down by 0.1 percent.

British drugmaker Hikma Pharmaceuticals has jumped after raising full-year revenue expectations for its injectables division.

HeidelbergCement has also moved to the upside in Frankfurt. The cement maker affirmed its full-year profit outlook after reporting a 12 percent increase in third quarter earnings.

Siemens has also advanced after the engineering firm raised dividend and announced a share buyback.

Commerzbank has moved sharply higher after the German lender reported a decline in third quarter earnings but backed its full-year outlook and maintained its dividend pledge.

Societe Generale shares have also jumped in Paris. The French lender reported a 32 percent increase in third-quarter net income on strong revenue growth.

Meanwhile, Italian lender UniCredit has tumbled after its third quarter net profit fell 99 percent to 29 million euros from 2.82 billion euros last year.

Inmarsat has also slumped in London after the mobile satellite company reported a drop in revenue in its major Maritime division.

In economic news, German exports and imports unexpectedly declined in September, official data revealed.

Exports dropped 0.8 percent month-on-month, reversing a 0.1 percent rise in August. At the same time, imports slid 0.4 percent following August's 2.4 percent decrease. Economists had forecast a 0.3 percent rise in exports and a 0.8 percent increase in imports.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits showed a slight decrease in the week ended November 3rd, according to a report released by the Labor Department.

The report said initial jobless claims edged down to 214,000, a decrease of 1,000 from the previous week's revised level of 215,000.

Economists had expected jobless claims to dip to 213,000 from the 214,000 originally reported for the previous week.

Following a two-day meeting, the Federal Open Market Committee is scheduled to announce its monetary policy decision at 2 pm ET.

Stocks In Focus

Shares of Wynn Resorts (WYNN) are moving sharply lower in pre-market trading after the hotel and casino operator reported weaker than expected third quarter earnings. CEO Matthew Maddox also said Wynn has seen a "slowdown" at its Macau location.

Energy drink maker Monster Beverage (MNST) is also likely to come under pressure after reporting third quarter results that beat estimates but revealing business partner and beverage giant Coca-Cola (KO) plans to release two new competitive drinks.

Shares of Qualcomm (QCOM) may also see initial weakness after the chipmaker reported fiscal fourth quarter results that exceeded expectations for forecast weaker than expected first quarter revenues due to a loss of chip sales to Apple (AAPL).

On the other hand, shares of TripAdvisor (TRIP) are moving significantly higher in pre-market trading after the travel website operator reported third quarter earnings that beat estimates.

Victoria's Secret parent L Brands (LB) is also likely to see initial strength after raising its third quarter earnings guidance, principally driven by outperformance at Bath & Body Works.

Shares of Cardinal Health (CAH) may also move to the upside after the prescription drug distributor reported fiscal first quarter results that exceeded expectations on both the top and bottom lines.

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