U.S. Stocks May See Further Upside Following Yesterday's Rally

wallstreet oct05 01dec22 lt

After moving sharply higher over the course of 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 S&P 500 futures up by 0.5 percent.

The futures had been pointing to a roughly flat open but moved higher following the release of tame inflation data.

A reading on inflation said to be preferred by the Federal Reserve showed core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in October after climbing by 0.5 percent in September. Economists had expected prices to rise by 0.3 percent.

The annual rate of core consumer price growth also slowed to 5.0 percent in October from 5.2 percent in September, coming in line with estimates.

However, the slowdown in the annual rate of growth was telegraphed by Federal Reserve Chair Jerome Powell in his closely watched remarks on Wednesday.

The inflation data was included as part of a Commerce Department report showing personal income increased by more than expected in the month of October.

The report said personal income climbed by 0.7 percent in October after rising by 0.4 percent in September. Economists had expected another 0.4 percent increase.

The Commerce Department said personal spending also advanced by 0.8 percent in October after climbing by 0.6 percent in September. The increase matched economist estimates.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended November 26th.

The report said initial jobless claims fell to 225,000, a decrease of 16,000 from the previous week's revised level of 241,000.

Economists had expected jobless claims to edge down to 235,000 from the 240,000 originally reported for the previous week.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of November.

The ISM's manufacturing PMI is expected to edge down to 49.8 in November from 50.2 in October, with a reading below 50 indicating a contraction.

The Commerce Department is also due to release its report on construction spending in the month of October. Construction spending is expected to dip by 0.3 percent.

Stocks turned in a lackluster performance in morning trading on Wednesday but moved sharply higher in reaction to Powell's highly anticipated remarks.

With the surge, the Dow reached a new seven-month closing high, while the Nasdaq and the S&P 500 reached their best closing levels in over two months.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 737.24 points or 2.2 percent to 34,589.77, the Nasdaq soared 484.22 points or 4.4 percent to 11,468.00 and the S&P 500 spiked 122.48 points or 3.1 percent to 4,080.11.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.9 percent, while China's Shanghai Composite Index rose by 0.5 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index is up by 0.9 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.1 percent.

In commodities trading, crude oil futures are jumping $1.58 to $82.13 a barrel after surging $2.35 to $80.55 a barrel on Wednesday. Meanwhile, after slipping $3.80 to $1,759.90 an ounce in the previous session, gold futures are soaring $43.80 to $1,803.70 an ounce.

On the currency front, the U.S. dollar is trading at 136.09 yen versus the 138.07 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0494 compared to yesterday's $1.0406.

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