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Negative Reaction To Earnings News May Weigh On Wall Street

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to move back to the downside following the rebound seen in the previous session.

A notable decline by shares of Apple (AAPL) may weigh on Wall Street, as the tech giant is slumping by 3.5 percent in pre-market trading.

The drop by Apple comes after the company reported better than expected fiscal fourth quarter earnings but a steep decline in iPhone sales. Apple also failed to provide guidance for the current quarter.

Shares of Amazon (AMZN) are also seeing pre-market weakness after the online retail giant reported third quarter results that exceeded estimates but provided a disappointing forecast for operating income in the fourth quarter.

On the other hand, shares of Alphabet (GOOGL) are moving sharply higher in pre-market trading after the Google parent reported third quarter results that beat analyst estimates on both the top and bottom lines.

Lingering concerns about the recent spike in coronavirus cases may also weigh on Wall Street along with uncertainty about next week's presidential elections.

Following the sell-off seen on Wednesday, stocks showed a significant rebound during trading on Thursday. The major averages all moved back to the upside, with the tech-heavy Nasdaq showing a particularly strong upward move.

The major averages pulled back off their best levels late in the session but remained firmly positive. The Dow climbed 139.16 points or 0.5 percent to 26,659.11, the Nasdaq jumped 180.72 points or 1.6 percent to 11,185.59 and the S&P 500 surged up 39.08 points or 1.2 percent at 3,310.11.

The jump by the tech-heavy Nasdaq was partly being led by Facebook (FB), with the social media spiking by 4.9 percent ahead of the release of its third quarter results after the close of trading.

Tech giants Apple (AAPL), Alphabet (GOOGL) and Amazon (AMZN) also moved sharply higher higher ahead of the release of the quarterly results.

Shares of Netflix (NFLX) also surged up by 3.7 percent after the video streaming giant raised the prices of its standard and premium plans.

The strength on Wall Street also came following the release of a report from the Commerce Department showing a stronger than expected rebound by the U.S. economy in the third quarter.

The Commerce Department said real gross domestic product skyrocketed by 33.1 percent in the third quarter after plunging by 31.4 percent in the second quarter. Economists had expected GDP to soar by 31.0 percent.

The substantial rebound in GDP came as consumer spending bounced back sharply, spiking by 40.7 percent in the third quarter after plummeting by 33.2 percent in the second quarter.

"Overall, the initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

He added, "But, with coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower."

Adding to the positive sentiment, the Labor Department released a report showing initial jobless claims fell to their lowest level since before the coronavirus-induced lockdowns in the week ended October 24th.

The report said initial jobless claims dropped to 751,000, a decrease of 40,000 from the previous week's revised level of 791,000.

Economists had expected jobless claims to dip to 775,000 from the 787,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims fell to their lowest level since hitting 282,000 in the week ended March 14th.

Meanwhile, the National Association of Realtors released a report showing pending home sales unexpectedly pulled back off a record high in the month of September.

NAR said its pending home sales index slumped by 2.2 percent to 130.0 in September after spiking by 8.8 percent to 132.9 in August. The drop came as a surprise to economists, who had expected pending home sales to jump by another 3.4 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Bargain hunting also contributed to the rebound on Wall Street after the sell-off seen on Wednesday pulled the Dow down to a nearly three-month closing low. The Nasdaq and the S&P 500 also hit their lowest closing levels in over a month.

Airline stocks showed a substantial move back to the upside on the day, with the NYSE Arca Airline Index spiking by 3.5 percent after ending the previous session at its lowest closing level in two months.

Oil stocks also saw considerable strength on the day, driving the NYSE Arca Oil Index up by 3 percent. The index bounced off a seven-month intraday low despite another steep drop by the price of crude oil.

Significant strength was also visible among semiconductor stocks, as reflected by the 2.7 percent jump by the Philadelphia Semiconductor Index.

Within the sector, shares of Inphi Corp. (IPHI) skyrocketed after the chipmaker agreed to be acquired by Marvell Technology (MRVL) for $10 billion in cash and stock.

Steel, transportation and chemical stocks also showed strong moves to the upside, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are slipping $0.14 to $36.03 a barrel after tumbling $1.22 to $36.17 a barrel on Thursday. Meanwhile, after slumping $11.20 to $1,868 an ounce in the previous session, gold futures are jumping $14.70 to $1,882.70 an ounce.

On the currency front, the U.S. dollar is trading at 104.37 yen versus the 104.61 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1682 compared to yesterday's $1.1674.

Asia

Asian stocks joined a global sell-off on Friday, with the threat of rising coronavirus cases and jitters over the upcoming U.S. presidential election weighing on the markets.

Chinese shares retreated as the ruling Communist Party concluded its key annual conclave during which it approved the 14th Five-Year Plan and Vision 2035, a long-term development plan that observers say hints at the continuation of President Xi Jinping in power for the next 15 years.

The benchmark Shanghai Composite Index tumbled 48.19 points, or 1.5 percent, to 3,224.53, while Hong Kong's Hang Seng Index plummeted 2 percent to 24,107.42.

Japanese stocks ended lower for the fifth straight session on concerns over the global economic recovery. The Nikkei 225 Index gave up 354.81 points, or 1.5 percent, to close at 22,977.13, while the broader Topix ended 2 percent lower at 1,579.33. The Nikkei fell 2.3 percent for the week, marking its biggest weekly loss since July 31.

Kyocera Corp lost nearly 10 percent, Oki Electric Industry fell over 7 percent and Mitsui & Co. declined 6.3 percent after posting disappointing earnings results.

Advantest surged 9.2 percent after raising its full-year outlook. Panasonic added 4.9 percent after announcing it will develop a new battery for electronic car maker Tesla Inc.

On the economic front, industrial output in Japan climbed a seasonally adjusted 4.0 percent sequentially in September, official data showed. That exceeded expectations for a gain of 3.2 percent following the 1.0 percent increase in August.

Overall inflation in the Tokyo region of Japan was down an annual 0.3 percent in October - coming in line with expectations following the 0.2 percent increase in September.

The unemployment rate in Japan stood at a seasonally adjusted 3.0 percent in September - shy of forecasts for 3.1 percent and unchanged from the August reading.

Australian markets ended a choppy session lower and suffered their worst weekly fall since April. The benchmark S&P/ASX 200 Index fell 32.70 points, or 0.6 percent, to 5,927.60, marking a weekly loss of about 3.9 percent on concerns over surging coronavirus infections in the U.S. and Europe. The broader All Ordinaries Index ended down 34.80 points, or 0.6 percent, at 6,133.20.

Banks ended mixed ahead of the RBA's interest-rate decision next Tuesday. Mining giant BHP shed 0.7 percent, while Rio Tinto advanced 1.6 percent. Smaller Fortescue Metals Group surged 4.5 percent a day after reporting record iron ore shipments in the September quarter.

Western Areas plunged 17.7 percent after the company slashed its nickel production guidance for the 2021 financial year.

Flight Centre Travel Group tumbled 3.5 percent and Qantas lost 3.7 percent after the Queensland premier announced the border would remain closed to Greater Sydney and Victoria.

Financial services giant AMP soared 19.5 percent after it received an indicative takeover offer from U.S. investment group Ares Management Corporation.

Gold miner Sandfire Resources rallied 3.5 percent after it agreed to acquire 85 percent joint venture interest in the Red Bore Copper Project.

Private sector credit in Australia was up 0.1 percent month-on-month in September, the Reserve Bank of Australia said - following the flat reading in August. On a yearly basis, credit rose 2.0 percent.

Seoul stocks fell sharply as both foreign and institutional investors dumped tech stocks amid uncertainties about the U.S. election and surging coronavirus cases globally. The benchmark Kospi tumbled 59.52 points, or 2.6 percent, to 2,267.15.

Market bellwether Samsung Electronics shed 2.6 percent and No. 2 chipmaker SK Hynix gave up 2.2 percent. Chemical maker LG Chem plunged 6.1 percent and Hyundai Motor, the country's largest automaker, declined 3.2 percent.

Industrial output in South Korea climbed a seasonally adjusted 5.4 percent month-on-month in September, Statistics Korea said in a report. That beat expectations for an increase of 3.0 percent following the upwardly revised 0.3 percent contraction in August (originally -0.7 percent).

On a yearly basis, industrial production jumped 8.0 percent - again exceeding expectations for a gain of 1.7 percent following the upwardly revised 2.6 percent decline in the previous month (originally -3.0 percent).

Another report showed that the total value of retail sales in South Korea rose a seasonally adjusted 1.7 percent month-on-month in September. That was higher than forecasts that suggested an increase of 1.5 percent following the 3.0 percent jump in August.

On a yearly basis, retail sales advanced 4.4 percent - again exceeding expectations for a gain of 4.0 percent following the 0.3 percent increase in the previous month.

Europe

European stocks are mixed in directionless trade on Friday as investors fretted about the economic fallout from increasing coronavirus cases and looked ahead to next week's U.S. presidential election for directional cues.

While the French CAC 40 Index is just above the unchanged line, the U.K.'s FTSE 100 Index is down by 0.3 percent and the German DAX Index is down by 0.5 percent.

Apple suppliers AMS and Dialog Semiconductor were moving lower after Apple reported its lowest revenue in China since 2014 and didn't offer investors any guidance for the quarter ending in December due to uncertainty around the coronavirus pandemic.

Air France-KLM, a Franco-Dutch airline holding company, has also fallen after it unveiled a 1.05 billion-euro ($1.24 billion) quarterly operating loss and warned of significantly lower earnings for the fourth quarter.

Shares of Glencore have also shown a notable move to the downside after the commodity trading and mining company cut its 2020 coal guidance.

On the other hand, tour operator TUI AG has risen after the company confirmed the signing of a further sale and leaseback or SLB agreement with BOC Aviation Limited for two new Boeing 737 MAX-8 aircraft.

Swedish auto maker Volvo Group has also advanced after it signed binding agreements with Japan's Isuzu Motors to form a strategic alliance within commercial vehicles.

Swiss Re has also rallied. The reinsurance giant said its capital position is very strong and it is well-equipped to benefit from an improving market environment.

Safran, which co-produces engines for the most-sold Airbus and Boeing jets with General Electric, has also advanced after confirming its 2020 outlook.

Building materials firm Saint-Gobain has also surged higher after providing an improved full-year earnings forecast. Energy giant Total SE has also climbed after its third-quarter profit topped forecasts.

International Consolidated Airlines Group has also moved higher. There is pent up demand for travel, but it will take until at least 2023 for passenger demand to recover to 2019 levels, new chief executive Luis Gallego said.

In economic news, German retail sales fell by 2.2 percent month-on-month in September, in contrast to a 1.8 percent rise in August, official data showed. Economists had forecast a monthly decrease of 0.8 percent.

French GDP expanded 18.2 percent in the third quarter after logging a sharp 13.7 percent contraction in the second quarter, preliminary data from the statistical office Insee showed. Economists had forecast sequential growth of 15.4 percent.

U.S. Economic Reports

After reporting a sharp decrease in U.S. personal income in the previous month, the Commerce Department released a report on Friday showing personal income rebounded by more than anticipated in the month of September.

The Commerce Department said personal income climbed by 0.9 percent in September after tumbling by a revised 2.5 percent in August.

Economists had expected personal income to rise by 0.4 percent compared to the 2.7 percent nosedive originally reported for the previous month.

The report also showed a bigger than expected increase in personal spending, which surged up by 1.4 percent in September. Spending was expected to match the 1.0 percent jump seen in August.

At 9:45 am ET, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of October. The Chicago business barometer is expected to drop to 58.0 in October from 62.4 in September, although a reading above 50 would still indicate growth.

The University of Michigan is due to release its revised reading on consumer sentiment in the month of October at 10 am ET. The consumer sentiment index for October is expected to be unrevised from the preliminary reading of 81.2, which was up from 80.4 in September.

Stocks In Focus

Shares of Twitter (TWTR) are moving sharply lower in pre-market trading after the social media giant reported third quarter earnings that exceeded estimates but weaker than expected user growth.

Electric utility FirstEnergy (FE) may also come under pressure after announcing the termination of CEO Charles E. Jones and two other executives who allegedly violated certain FirstEnergy policies and its code of conduct.

On the other hand, shares of Mohawk Industries (MHK) are seeing significant pre-market strength after the flooring manufacturing reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

Athletic apparel maker Under Armour (UAA) is also likely to move to the upside after reporting better than expected third quarter results and provided upbeat guidance.

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