The major U.S. index futures are pointing to a higher opening on Thursday. The markets could get a head start due to the release of a report that showed a smaller-than-expected contraction in third GDP growth. Additionally, the encouraging commitment from the Fed that it is willing to take additional actions to alleviate the liquidity crunch should encourage traders to commit themselves. Additionally, the commodity space may see buoyancy due to the rise in commodity prices.
U.S. stocks experienced significant degree of volatility on Wednesday, atypical of a session coinciding with an interest rate announcement, before closing on a mixed note. The major averages were seen moving back and forth across the unchanged line for much of the session, with the indexes picking up solid momentum in late trading. Nevertheless, the indexes pulled back sharply at the same momentum at which they advanced.
The Dow Industrials ended the session down 74.16 points or 0.82% at 8,991 and the S&P 500 Index receded 10.42 points or 1.11% to 930, while the Nasdaq Composite Index gained 7.74 points or 0.47% to 1,657.
Financials led the Dow lower again, with Citigroup (C) (down 4.16%), JP Morgan Chase (JPM) (down 5.03%) and Bank of America (BAC) (down 3.04%) posting notable losses. Intel (INTC) (down 5.80%), Johnson & Johnson (JNJ) (down 4.14%), Coca-Cola (KO) (down 3.09%), Merck (MRK) (down 3.40%), Pfizer (PFE) (down 3.54%), Procter-Gamble (PG) (down 3%) and Verizon (VZ) (down 3.63%) also posted notable losses. On the other hand, General Motors (GM) rallied 8.16%, while Caterpillar (CAT) and Alcoa (AA) advanced over 3% each.
S&P analysts believe that there has to be consistent price gains on strong volume levels over the next couple of weeks to see any meaningful reversal in sentiment. The analysts see a small zone of chart resistance for the S&P 500 Index near 1,000, but nothing of substance until the 1,100 to 1,200 zone.
Since early October, the Dow Jones Industrial Average has been locked in the 8,186-9,252 range, with these levels likely to serve as downside support and upside resistance, respectively. If the index moves out of this trading range, to the upside, it is likely to face resistance around the 10,800 level.
Among the sector indexes, the KBW Bank Index fell 3.60% and the Dow Jones Utility Average slipped 3.12%. The Amex Airline Index ended down 3.72%, while the Philadelphia Semiconductor Index fell 2.78%. However, the Amex Biotechnology Index rose 3.47% and the Philadelphia Housing Sector Index rallied 6.29%. The Amex Oil Index and the Philadelphia Oil Service Sector Index jumped 3.34% and 7.21%, respectively, while the Amex Gold Bugs Index soared 12.97%. Retail, transportation and net working stocks also saw some strength.
Fed Appeases Street
The Fed announced a 50 basis point reduction in interest rates to 1% at its October meeting. In the post-meeting policy statement, the Fed acknowledged that the pace of economic activity has slowed markedly due to a decline in consumer expenditures. The central bank also noted that business equipment spending and industrial production have weakened in recent months, while it also said it sees risks to U.S. exports from slowing economic activity in many foreign economies. Additionally, the FOMC said it expects spending to be curbed further due to tighter credit market conditions.
That said, the central bank expressed confidence that inflation will moderate in coming quarters due to weakening economic growth and declines in the prices of energy and other commodities. The FOMC offered comfort by suggesting that it will act as needed to promote sustainable economic growth and price stability.
Among the economic reports released yesterday, durable goods orders rose 0.8% in September. The increase was mainly due to a jump in civilian aircraft and defense orders. Stripping off transportation orders, new orders fell 1.1%. Although core capital goods orders declined 1.4%, shipments of this category of goods rose 2%.
Currency, Commodity Markets
Crude oil futures, which advanced $4.77 to $67.50 on Wednesday, are currently rising $1.45 to $68.95 a barrel. The increase in the previous session came amid the dollar's weakness and the release of the weekly oil inventory report for the week ended October 24th, which showed that crude oil stockpiles rose by 0.5 million barrels to 311.9 million barrels. Crude oil inventories are now in the upper half of the average range for this time of the year.
Gasoline stockpiles fell by 1.5 million barrels, while distillate inventories rose by 2.3 million barrels, but they are still in the lower half of the average range for this time of the year. Refinery capacity utilization averaged 83.3% over the four-weeks ended October 24th compared to 80% in the previous week.
Gold futures are climbing $13.20 to $767.20 an ounce after the precious metal rose $13.50 to $754 an ounce in the previous session.
On the currency front, the U.S. dollar is trading at 98.645 yen compared to the 97.39 yen it was worth at the close of New York trading on Wednesday. Against the euro, the dollar is currently valued at $1.3035 compared to yesterday's $1.2961.
Asia
Stock markets across the Asia-Pacific region closed sharply higher on Thursday, with South Korea's KOSPI surging up 12%, after Hong Kong, Taiwan, and China slashed interest rates following a rate cut in the U.S. Meanwhile, expectations grew that Japan's central bank would also cut its interest rates for the first time in seven years when its policy board meets on Friday.
Japan's Nikkei 225 average opened higher and advanced further over the course of trading to close up 817.86 points or 9.96% at 9,030. While a softer yen boosted exporters, commodity-related stocks surged on the back of stronger commodity prices. The benchmark Nikkei climbed 817.9 points or 9.9% to close at 9,029.8, its highest close since October 22. The nearly 10% jump also marked the biggest one-day gain since October 14, when the Nikkei surged 14.2%.
In the banking sector, the gainers included Mitsubishi UFJ (up 6.4%), Mizuho Financial (up 18.2%), and Sumitomo Mitsui (up 12.4%). Sumitomo Mitsui said that it would fall 63% short of its earnings target for the full year. Japan's top brokerage firm, Nomura Holdings, rose 11.6%.
Mobile services provider Softbank closed limit-up after the company reported solid second-quarter results and profit growth forecasts. Game maker Nintendo climbed 10.9% ahead of its second-quarter earnings announcement later today. Toshiba rose 6.4% despite reporting a 26.85 billion yen second-quarter net loss compared to a 25.03 billion yen net profit a year ago.
South Korea's Kospi's hovered in positive territory throughout the session before closing up 115.75 points or 11.95% at 1,085. The U.S. Federal Reserve announced Wednesday a currency swap deal with the central bank of Korea and three other emerging economies, promising to supply up to $30 billion in emergency liquidity funds.
Large-cap stocks posted strong gains. Top steel maker POSCO jumped 14.9% and leading shipyard Hyundai Heavy Industries surged up 15.0%. In the tech sector, market heavyweight Samsung Electronics soared 13.1% and Hynix Semiconductor closed up 14.7% despite reporting weaker-than-expected quarterly earnings before the market opened for trading today.
Hynix said its net loss for the July-September period was 1.65 trillion won compared to a loss of 707 billion won three months earlier. Automaker Hyundai Motor shot up 14.7%. Banks reversed their earlier double-digit losses and closed sharply higher, with KB Financial Group rising 9.4% and Shinhan Financial Group jumping 13.8%.
The Chinese stock market posted modest gains, led by financial stocks and refiners. The benchmark Shanghai Composite Index closed up 43.80 points or 2.6% at 1,764.
Hong Kong's Hang Seng Index opened notably higher and advanced steadily through the remainder of the session. The index closed up 1,627 points or 12.8% at the day's high of 14,329.
Stocks gained across the board, with Chinese stocks outperforming on hopes of further economic stimulus measures from Beijing. HSBC surged up 10.7%, China Mobile soared 13.2%, CNOOC jumped 22.4%, and PetroChina gained 19.9%.
Australia's All Ordinaries showed a steady advance throughout the session and closed up 151.50 points or 3.98% at 3,957.
A surge in base metal prices by as much as 12% on the London Metal Exchange and higher crude oil prices boosted mining and energy stocks. Index leader BHP Billiton advanced 8.8% and Rio Tinto rose 9.2%. Woodside Petroleum jumped 12.8% and Santos climbed 9.8%. Among gold miners, Lihir Gold soared 19.2% and Newcrest Mining added 9.7% after the spot gold price rose nearly 2% in Asian trading.
Meanwhile, the financial sector posted only modest gains. Westpac edged up 0.2% despite reporting a 12% rise in annual net profit, National Australia Bank rose 4.9%, Commonwealth Bank added 0.3%, and ANZ gained 1.9%. St George Bank climbed 2.7% and investment bank Macquarie Group rose 1.8%.
Europe
The European markets are advancing on Thursday. The French CAC 40 Index is gaining 2.06% compared to a 3.73% advance by the German DAX Index, while the U.K.'s FTSE 100 Index is rising 2.18%.
In corporate news, Deutsche Bank (DB) reported that its third quarter pre-tax loss was 93 million euros. Net revenues fell 11% to 1.7 billion euros. Alcatel-Lucent (ALU) said its third quarter loss was 40 million euros compared to a loss of 345 million euros in the year-ago period. Revenues eased to $4.07 billion from $4.35 billion last year.
Unilever (UL) said its third quarter net profits rose to 1.64 billion euros from 1.01 billion euros in the year-ago period. The company noted that the quarter's earnings included after-tax of 487 million euros. Sales were up 2% to 10.4 billion euros.
The German Federal Statistical Office said that the number of employed persons in Germany rose by 582,000 persons or 1.4% year-over-year in September to 40.62 million. On a monthly basis, the number of employed rose a seasonally adjusted 0.1%. The unemployment rate calculated based on ILO standards was 7.1% in September compared to 8.2% in the year-ago period.
Another report released by the agency showed that German wholesale sales increased 7.5% year-over-year in real terms in September. Upon adjusting for calendar and seasonal variations, wholesale sales increased a real 0.5%.
Meanwhile, the French National Institute of Statistics and Economic Studies showed that producer prices fell by 0.4% from the previous month in September following a 0.5% decline in August, when it declined for the first time since December 2006. Annually, producer prices rose a strong 6.1%.
U.S. Economic Reports
The Bureau of Economic Analysis released the advance third quarter GDP report, which showed that the U.S. economy contracted at a 0.3% rate, less severe than the 0.5% drop expected by economists. In the second quarter, the GDP growth was 2.8%. On a year-over-year basis, third quarter GDP growth was 0.8% compared to 2.1% in the second quarter.
The decline in third quarter GDP compared to the previous quarter reflected negative contributions from personal consumption expenditures, residential fixed investment and equipment and software that were offset to some extent positive contributions from federal government spending, exports, private inventory, non-residential structures and state and local government spending. The Labor Department said that the number of individuals claiming unemployment benefits remained at 479,000 in the week ended October 25th. Economists had been expecting jobless claims to decline to 473,000 from the 478,000 originally reported for the previous week.
At the same time, the report showed that the less volatile four-week moving average declined to 475,500 from the previous week's revised average of 480,500. The report also showed a decline in continuing claims in the week ended October 18th, which fell to 3.727 million from the preceding week's revised level of 3.726 million.
Earnings
Cigna (CI) said its third quarter earnings declined to 62 cents per share from $1.28 per share last year. However, revenues rose 10% to $4.85 billion. Analysts expected earnings of $1.06 per share on revenues of $4.86 billion. The company also lowered its adjusted operating income guidance for 2008 to $3.40 to $3.50 per share. Motorola (MOT) reported third quarter sales of $7.5 billion, while its GAAP net loss from continuing operations, including a net charge of 23 cents per share, was 18 cents per share. Analysts expected earnings of 2 cents per share on revenues of $7.82 billion. The company guided fourth quarter earnings from continuing operations to be 2-4 cents per share and full year earnings to be in the range of 5-7 cents per share. The consensus estimates call for earnings of 7 cents per share for the fourth quarter and 6 cents per share for the full year.
Colgate-Palmolive's (CL) third quarter earnings climbed to 94 cents per share from 77 cents per share in the year-ago period. On an adjusted basis, the company's earnings were $1.04 per share. Revenues were up 13% to $3.99 billion. The consensus estimates had called for earnings of 98 cents per share on revenues of $3.99 billion.
Stocks in Focus
Wells Fargo (WFC) is likely to be in focus after it said it has issued 25,000 shares of fixed rate cumulative perpetual preferred stock without par value to the U.S. Treasury for a total price of $25 billion. The sale of shares is in accordance with the Treasury's Troubled Asset Relief Program-TARP Capital Purchase Program, which allows the government to invest in U.S. financial institutions to help them survive the liquidity crunch.
Allied Waste (AW) may react to its announcement that its third quarter adjusted earnings were 28 cents per share on 3% revenue growth to $1.61 billion. Analysts, on average, estimated earnings of 26 cents per share on revenues of $1.59 billion. The company also said its proposed merger with Republic Services (RSG) remains on track to be completed by mid-December.
Atmel (ATML) could gain ground after it rejected a take over offer from Microchip (MCHP) and ON Semiconductor Corp. (ONN), terming the offer as inadequate in multiple respects, including value, conditionality and complexity. The company reported that its third quarter revenues were $400 million and earnings were 9 cents per share, up 0.4% from the year-ago quarter. Analysts, on average, estimated earnings of 1 cent per share on revenues of $400.81 million.
Ameriprise Financial (AMP) is expected to see some buying interest after it reported third quarter core operating income of $1.04 per share compared to 99 cents per share last year. The core revenues declined to $1.99 billion from $2.11 billion last year. The consensus estimates had called for earnings of 82 cents per share on revenues of $1.95 billion.
CA (CA) rose in Wednesday's after hours session after it reported second quarter adjusted earnings of 41 cents per share, exceeding the 39 cents per share consensus estimate. Revenues rose 4% to $1.11 billion, missing the consensus estimate of $1.12 billion. The company also upwardly revised its 2008 earnings per share estimate to $1.48-$1.55 per share from its earlier estimate of $1.45-$1.52 per share.
Maxim Integrated (MXIM) may be in focus after it reported third quarter GAAP net income of 21 cents per share, up from 20 cents per share last year. Net revenues were flat at $501.2 million compared to the consensus estimate of $501.79 million. The company lowered its 2008 fourth revenue guidance to $410-$440 million from its earlier estimate of $460-$490 million, while analysts estimate revenues of $481.04 million.
RealNetworks (RNWK) could also react to its announcement that its third quarter revenues were $152 million and its loss for the quarter was 3 cents per share. This compares to revenues of $145.1 million and net income of 3 cents per share last year. The company lowered its revenue guidance for the fourth quarter to $150-$157 million due to the strengthening of the dollar. On a GAAP basis, the company expects a loss of 1-4 cents per share. For the full year, the company expects a GAAP loss of 3-6 cents per share on revenues of $602-$609 million.
Symantec (SYMC) may come under selling pressure after it said its expects third quarter adjusted earnings of 30-33 cents per share on revenues of $1.45-$1.5 billion. Analysts, on average, estimated earnings of 36 cents per share on revenues of $1.61 billion. The company also reported second quarter adjusted earnings that rose to 37 cents per share from 29 cents per share last year, exceeding the consensus estimate of 35 cents per share. Revenues climbed to $1.52 billion from $1.42 billion last year, but they trailed the mean analysts' estimate of $1.54 billion.
JDSU (JDSU) is expected to move to the downside after it reported that its first quarter net revenues of $380.7 million were below the $386.06 million consensus estimate. The company's adjusted earnings rose to 11 cents per share from 8 cents per share last year. Analysts expected earnings of 9 cents per share for the quarter. The company guided second quarter revenues to $360-$390 million compared to the $416.96 million consensus estimate.
Credit card processor Visa (V) could be in focus after it reported adjusted fourth quarter loss of 58 cents per share on 17% revenue growth to $1.71 billion. The consensus estimate had called for earnings of 55 cents per share on revenues of $1.68 billion. The company now expects annual net revenue growth at the low-end of its previous guidance range of 11%-15%.
Among insurers, MetLife (MET) reported that third quarter profits declined to 83 cents per share from $1.29 per share last year, even as revenues climbed 14.5% to $13.38 billion. Prudential (PRU) said its after-tax operating profit fell to 74 cents per share from 94 cents per share in the year-ago period. Revenues declined 9% to $6.15 billion.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.