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Disney Earnings, Inflation Data May Lead To Continued Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to extend the rally seen in the previous session.

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.

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.

The rally on Wall Street came after the Labor Department released a report showing U.S. consumer prices unexpectedly came in flat in the month of July.

The Labor Department said its consumer price index was unchanged in July after jumping by 1.3 percent in June. Economists had expected consumer prices to edge up by 0.2 percent.

Compared to the same month a year ago, consumer prices in July were up by 8.5 percent, reflecting a bigger than expected slowdown from the 9.1 percent spike in June.

The annual rate of price growth was expected to slow to 8.7 percent from the four-decade high seen in the previous month.

Meanwhile, the report said core consumer prices, which exclude food and energy prices, rose by 0.3 percent in July after climbing by 0.7 percent in June. Core prices were expected to increase by 0.5 percent.

The annual rate of core consumer price growth was unchanged at 5.9 percent, while economists had expected an acceleration to 6.1 percent.

The tamer than expected inflation data has led to speculation that the Federal Reserve will slow the pace of interest rate hikes at its September meeting.

"Today's inflation report might lead the Fed to downshift the size of its rate hikes to 50bps in September," said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.

She added, "However, we still see 75bps as likely given the ongoing inflation pressures, still elevated inflation readings, and ongoing tight labor market that is leading to large wage gains."

Semiconductor stocks showed a substantial rebound after pulling back sharply in recent sessions, resulting in a 4.3 percent spike by the Philadelphia Semiconductor Index.

Considerable strength was also visible among computer hardware stocks, as reflected by the 4 percent surge by the NYSE Arca Computer Hardware Index. The index ended the session at its best closing level in two months.

Networking stocks also turned in a strong performance on the day, driving the NYSE Arca Networking Index up by 3.6 percent to a three-month closing high.

Housing, transportation and banking stocks also saw considerable strength, moving higher along with most of the other major sectors.

Commodity, Currency Markets

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.

Asia

Asian stocks followed Wall Street higher on Thursday after a report showed U.S inflation cooled more than expected in July, reflecting lower energy prices. Slower inflation will mean that the Federal Reserve can moderate its rate hike policy. Japanese markets were closed for a holiday.

China's Shanghai Composite Index rallied 1.6 percent to 3,281.67, while Hong Kong's Hang Seng Index spiked 2.4 percent to 20,082.43.

Shares of Longfor Group Holdings surged 5.7 percent in Hong Kong after the Chinese developer denied rumors that it had missed payment on commercial paper.

Seoul stocks rose sharply amid hopes that sky-high U.S. inflation may finally have peaked. The Kospi jumped 1.7 percent to close at 2,523.78. Samsung Electronics, LG Chem and LG Energy Solution rose 1-3 percent.

Australian markets ended at a two-month high after a measure of consumer inflation expectations in the country dropped to 5.9 percent in August, versus 6.3 percent prior.

The benchmark S&P ASX 200 Index advanced 1.1 percent to 7,071, while the broader All Ordinaries Index ended 1.2 percent higher at 7,325.40. Mining heavyweight BHP rallied 2.2 percent and smaller rival Fortescue Metals Group added 1.3 percent.

Santos jumped 2.3 percent after the oil & gas exploration and production company purchased a gas pipeline project that would connect its long-contested Narrabri gas project in NSW to the east-coast market.

Europe

European shares are turning in a mixed performance on Thursday as earnings proved to be a mixed bag and German government bond yields crept higher, echoing moves in U.S. Treasuries.

The dollar index remained on the back foot amid hopes that inflation in the United States may have peaked, which could allow the Fed to slow the pace of interest rate increases.

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.

Deutsche Telekom AG is marginally higher. The telecom major raised its fiscal 2022 earnings outlook again, despite reporting a lower profit in its second quarter.

Dutch financial insurance company Aegon has jumped after raising its forecasts for full-year operating capital generation and 2021-2023 free cash flow.

Zurich Insurance has also moved to the upside. The Swiss insurer reported a 25 percent rise in first-half operating profit, driven by an underlying improvement across all businesses.

On the other hand, miner Antofagasta has moved notably lower after reporting a 48 percent drop in interim earnings.

German industrial conglomerate Siemens has also declined. The company posted its first quarterly loss in 12 years as a result of costs related to its Siemens Energy investment and decision to quit Russia.

U.S. Economic Reports

After yesterday's report showing U.S. consumer prices came in flat in the month of July, the Labor Department released a separate report on Thursday showing producer prices unexpectedly decreased during the month.

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.

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.

At 11 am ET, the Treasury Department is scheduled to announce the details of this month's auction of twenty-year bonds.

The Treasury is also due to announce the results of this month's auction of $21 billion worth of thirty-year bonds at 1 pm ET.

Stocks In Focus

Shares of Vacasa (VCSA) are surging in pre-market trading after the vacation rental services provider reported an unexpected second quarter profit and raised its full-year guidance.

Snack maker Utz Brands (UTZ) is also likely to see initial strength after reporting better than expected second quarter results and raising its full-year sales outlook.

Meanwhile, shares of Six Flags (SIX) are seeing substantial pre-market weakness after the theme park operator reported second quarter results that missed analyst estimates.

High-end speaker maker Sonos (SONO) is also likely to come under pressure after reporting weaker than expected fiscal third quarter results and lowering its full-year guidance.

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