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U.S. Stocks May Extend Yesterday's Rally In Early Trading

wallstreet nov01 11aug22 lt

Following the rally seen in the previous session, stocks are likely to see further upside in early trading on Thursday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 241 points.

Early buying interest may be generated in reaction to upbeat earnings news from Disney (DIS), with the entertainment giant surging by 9.6 percent in pre-market trading.

The jump by Disney comes after the company reported fiscal third quarter results that exceeded analyst estimates on both the top and bottom lines. Disney also revealed plans to raise prices for its Disney+ and Hulu streaming services.

The futures saw further upside after the Labor Department released a report showing producer prices unexpectedly decreased in the month of July.

The Labor Department said its producer price index for final demand fell by 0.5 percent in July after surging by a revised 1.0 percent in June.

The pullback came as a surprise to economists, who had expected producer prices to edge up by 0.2 percent compared to the 1.1 percent jump originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed to 9.8 percent in July from 11.3 percent in June. Economists had expected the annual rate of growth to slow to 10.4 percent.

Meanwhile, the Labor Department said core producer prices, which exclude prices for food, energy and trade services, crept up by 0.2 percent in July after rising by 0.3 percent in June.

The annual rate of core producer price growth also slowed to 5.8 percent in July from 6.4 percent in the previous month.

Following yesterday's tamer than expected consumer price inflation data, today's report may add to optimism that the Federal Reserve will slow the pace of its interest rate hikes next month.

Meanwhile, a separate Labor Department report showed initial jobless claims climbed to their highest level in almost nine months in the week ended August 6th.

The report showed initial jobless claims rose to 262,000, an increase of 14,000 from the previous week's revised level of 248,000.

Economists had expected jobless claims to inch up to 263,000 from the 260,000 originally reported for the previous week.

With the increase, jobless claims reached their highest level since hitting 265,000 in the week ended November 13, 2021.

With traders reacting positively to highly anticipated consumer price inflation data, stocks moved sharply higher during trading on Wednesday. The rally more than offset the weakness seen on Tuesday, with the major averages reaching three-month closing highs.

The major averages all finished the day firmly in positive territory. The Dow jumped 535.10 points or 1.6 percent to 33,309.51, the Nasdaq spiked 360.88 points or 2.9 percent to 12,854.80 and the S&P 500 surged 87.77 points or 2.1 percent to 4,210.24.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index rallied by 1.6 percent, while Hong Kong's Hang Seng Index soared by 2.4 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is down by 0.4 percent, the French CAC 40 Index is just above the unchanged line and the German DAX Index is up by 0.3 percent.

In commodities trading, crude oil futures are jumping $1.14 to $93.07 a barrel after surging $1.43 to $91.93 a barrel a barrel on Wednesday. Meanwhile, after inching up $1.40 to $1,813.70 an ounce in the previous session, gold futures are slipping $3.90 to $1,809.80 an ounce.

On the currency front, the U.S. dollar is trading at 131.94 yen versus the 132.89 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0344 compared to yesterday's $1.0299.

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