Market Analysis

Beyond the Numbers

Futures Pointing To Modestly Higher Open On Wall Street
4/11/2019 8:59 AM

The major U.S. index futures are pointing to a slightly higher opening on Thursday, with stocks potentially benefiting from subdued buying interest once again.

Continued optimism about a U.S.-China trade deal may generate some buying interest, although traders are also digesting a report from the Labor Department showing a much bigger than expected increase in producer prices.

While the bigger than expected increase in producer prices was largely driven by energy prices, the data may still raise concerns about the outlook for inflation.

Meanwhile, a separate Labor Department showed first-time claims for U.S. unemployment benefits once again slid to their lowest level in nearly 50 years in the week ended April 6th

While buying interest was somewhat subdued, stocks moved mostly higher over the course of the trading day on Wednesday. With the upward move, the tech-heavy Nasdaq ended the session at its best closing level in over six months.

The Dow bounced back and forth across the unchanged line before closing up 6.58 points or less than a tenth of a percent at 26,157.16. The Nasdaq climbed 54.97 points or 0.7 percent to 7,964.24 and the S&P 500 rose 10.01 points or 0.4 percent to 2,888.21.

The higher close on Wall Street came after the minutes of the Federal Reserve's latest monetary policy meeting suggested the outlook for interest rates remains fluid.

The minutes said a majority of meeting participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving rates unchanged for the remainder of the year.

Several of these participants saw the current target range for rates of 2.25 to 2.50 percent as close to their estimates of its longer-run neutral level.

However, the minutes noted participants continued to emphasize that future rate decisions would depend on their ongoing assessments of the economic outlook and potential risks.

"Several participants noted that their views of the appropriate target range for the federal funds rate could shift in either direction based on incoming data and other developments," the minutes said.

Some participants even indicated it would be appropriate to raise rates modestly later this year if the economy evolves as they currently expect.

With regard to the economic outlook, the minutes said participants continued to view a sustained economic expansion, strong labor market conditions, and inflation near the Fed's 2 percent target as the most likely outcomes over the next few years.

"Nevertheless, participants generally expected the growth rate of real GDP this year to step down from the pace seen over 2018 to a rate at or modestly above their estimates of longer-run growth," the Fed said.

A number of participants judged that economic growth in the remaining quarters of 2019 and in the subsequent couple of years would likely be a little lower than they had previously forecast.

The downward revisions were attributed to disappointing news on global growth and less of a boost from fiscal policy than had previously been anticipated.

The minutes noted that the meeting also featured continued discussions on options for transitioning to the longer-run size of the balance sheet.

On the U.S. economic front, the Labor Department released a report showing a spike in energy prices contributed to a slightly bigger than expected increase in consumer prices in the month of March.

The Labor Department said its consumer price index climbed by 0.4 percent in March after edging up by 0.2 percent in February. Economists had expected the index to rise by 0.3 percent.

Excluding the jump in energy prices and a modest increase in food prices, core consumer prices inched up by 0.1 percent in February, matching the uptick seen in the previous month. Core prices had been expected to tick up by 0.2 percent.

Computer hardware stocks showed a significant move to the upside over the course of the session, driving the NYSE Arca Computer Hardware Index up by 1.8 percent to a six-month closing high.

Considerable strength was also visible among networking stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Networking Index.

Telecom, biotechnology, and oil service stocks also saw notable strength on the day, while considerable weakness emerged among gold stocks.

Commodity, Currency Markets

Crude oil futures are sliding $0.82 to $63.79 a barrel after climbing $0.63 to $64.61 a barrel a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,299.50, down $14.40 compared to the previous session's close of $1,313.90. On Wednesday, gold rose $5.60.

On the currency front, the U.S. dollar is trading at 111.31 yen compared to the 111.01 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1263 compared to yesterday’s $1.1274.


Asian stocks ended mixed on Thursday, as dovish messages being sent from the ECB and the Federal Reserve added to investor concerns over slowing global growth.

Investors also braced for more Brexit uncertainty after EU leaders agreed to extend the date of Britain's departure from the bloc to the end of October.

China's Shanghai Composite Index tumbled 51.97 points or 1.6 percent to 3,189.96 despite more signs of progress in U.S.-China trade talks. Hong Kong's Hang Seng Index slumped 280.11 points or 0.9 percent to 29,839.45.

U.S. Treasury Secretary Steven Mnuchin told CNBC a call with Chinese Vice Premier Liu He on Tuesday night was productive and the two sides have settled on a mechanism to police any agreement, including new enforcement offices.

Japanese shares ended a choppy session slightly higher as the yen strengthened and investors awaited earnings results from Yaskawa Electric, a manufacturer with large exposure to China.

The Nikkei 225 Index inched up 23.81 points or 0.1 percent to 21,711.38, while the broader Topix closed little changed at 1,606.52.

Financials ended broadly lower after U.S. Treasury yields weakened overnight on expectations that the Fed will hold rates steady or possibly cut them by the end of the year.

Mitsubishi UFJ Financial Group declined 1.4 percent, Sumitomo Mitsui Financial shed 1.6 percent, Dai-ichi Life Holdings gave up 2.2 percent and T&D Holdings tumbled 2.7 percent.

Ryohin Keikaku plunged almost 10 percent after warning it expects a 6 percent fall in net profit for the year ending February 2020.

Australian markets fell modestly, dragged down by banks and miners on worries over slower global economic growth.

The benchmark S&P/ASX 200 Index dropped 24.80 points or 0.4 percent to 6,198.70, while the broader All Ordinaries Index ended down 22.40 points or 0.4 percent at 6,294.10.

The big four banks fell between 0.7 percent and 1.3 percent after U.S. government bond yields fell Wednesday following an underwhelming report on consumer prices and cautious signals from central-banks.

Bank of Queensland slumped 4.9 percent as it cut payout after reporting an 8 percent drop in first-half cash earnings.

Mining heavyweights BHP and Rio Tinto declined 0.6 percent and 1.3 percent, respectively amid broader weakness in metal prices.

Whitehaven Coal edged up 0.3 percent despite cutting its full-year production outlook. Energy stocks ended mixed, while healthcare stocks such as CSL and Cochlear ended down over 1 percent each.

Seoul stocks ended flat as investors adopted a cautious stance ahead of an upcoming summit between South Korea and the United States, which is expected to focus on ways to bring North Korea back to the dialogue table. The benchmark Kospi finished marginally higher at 2,224.44.


European stocks have moved to the upside on Thursday as temporary Brexit relief has overshadowed fears of a global growth slowdown.

While the French CAC 40 Index has advanced by 0.9 percent, the German DAX Index is up by 03 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

The euro is fluctuating in response to ECB President Draghi's reaffirmation of the significant risks facing the eurozone economy and delayed inflationary pressures.

German inflation slowed to an eleven-month low in March, a report showed earlier today.

Separately, preliminary data from Eurostat showed eurozone house price inflation slowed in the fourth quarter of 2018 after remaining unchanged in the previous three month.

Drug delivery devices maker Gerresheimer has moved notably higher in Frankfurt after reporting a surge in first quarter profit and lifting its full-year adjusted EBITDA view.

French food services and facilities management company Sodexo S.A. has also jumped after reaffirming its guidance.

Louis Vuitton owner LVMH has also soared after reporting strong quarterly revenue growth.

On the other hand, Italian cable maker Prysmian has slumped. The company said it would review its 2018 results in light of another setback facing its WesternLink submarine connection and damage claims following an anti-competition probe.

Dutch semiconductor equipment manufacturing company ASML Holding has also dropped after reports that Chinese employees stole corporate secrets from the company.

British insurer Standard Life Aberdeen has also tumbled on going ex-dividend.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits once again slid to their lowest level in nearly 50 years in the week ended April 6th, according to a report released by the Labor Department.

The report said initial jobless claims fell to 196,000, a decrease of 8,000 from the previous week’s revised level of 204,000.

The continued drop surprised economists, who had expected jobless claims to rise to 211,000 from the 202,000 originally reported for the previous week.

With the unexpected decrease, initial jobless claims fell to their lowest level since hitting 193,000 in October of 1969.

A separate report released by the Labor Department showed a spike in energy prices contributed to a bigger than expected increase in U.S. producer prices in the month of March.

The Labor Department said is producer price index for final demand climbed by 0.6 percent in March after inching up by 0.1 percent in February. Economists had expected prices to rise by 0.3 percent.

Core producer prices, which exclude food and energy prices, also rose by 0.3 percent in March following a 0.1 percent uptick in February. Core prices had been expected to edge up by 0.2 percent.

At 9:30 am ET, Federal Reserve Vice Chair Richard Clarida is due to deliver a speech on the U.S. economic outlook and monetary policy at the Institute of International Finance Washington Policy Summit in Washington, D.C.

New York Fed President John Williams is scheduled to deliver the keynote address at the Association for Neighborhood & Housing Development’s annual conference in New York at 9:35 am ET.

At 9:40 am ET, St. Louis Fed President James Bullard is due to deliver a presentation on the U.S. economy and monetary policy at the Community Development Foundation of Tupelo in Mississippi.

The Treasury Department is schedule to announce the results of its auction of $16 billion worth of thirty-year bonds at 1 pm ET.

At 4 pm ET, Fed Governor Michelle Bowman is due to deliver a speech on “Community Banking in the Age of Innovation” at the Fed Family Luncheon in San Francisco, California.

Stocks In Focus

Shares of Bed Bath & Beyond (BBBY) are moving significantly lower in pre-market trading after the retailer reported fourth quarter earnings that exceeded analyst estimates but provided disappointing first quarter guidance.

Drug store chain Rite Aid (RAD) may also see initial weakness after reporting mixed fourth quarter results and giving a weak forecast for the current year.

On the other hand, shares of JetBlue (JBLU) may move to the upside after the airline announced plans to start flying to London in 2021.

Discount retailer Five Below (FIVE) is also seeing pre-market strength after J.P. Morgan Securities upgraded its rating on the company’s stock to Overweight from Neutral.
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