U.S. Stocks May Come Under Pressure On Disappointing Earnings News
Following the lackluster performance seen in the previous session, stocks are likely to come under pressure in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 399 points.
The downward momentum on Wall Street partly reflects disappointing earnings news from financial giants JPMorgan Chase (JPM) and Morgan Stanley (MS).
JPMorgan and Morgan Stanley are both seeing pre-market weakness after reporting second quarter earnings that missed analyst estimates.
Concerns about inflation and higher interest rates are also likely to continue weighing on the markets after the Labor Department released a report showing U.S. producer prices increased by more than expected in the month of June.
The Labor Department said its producer price index for final demand jumped by 1.1 percent in June after climbing by an upwardly revised 0.9 percent in May.
Economists had expected producer prices to increase by 0.8 percent, matching the advance originally reported for the previous month.
The annual rate of producer price growth accelerated to 11.3 percent in June, reflecting the largest spike since a record 11.6 percent jump in March.
Economists had expected the annual rate of producer price growth to slow to 10.7 percent in June from 10.9 percent in May.
A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly inched higher in the week ended July 9th.
The report showed initial jobless claims crept up to 244,000, an increase of 9,000 from the previous week’s unrevised level of 235,000. The uptick surprised economists, who had expected jobless claims to come in unchanged.
After recovering from an early move to the downside, stocks showed a lack of direction over the course of the trading session on Wednesday. The major averages climbed off their early lows and spent the rest of the day bouncing back and forth across the unchanged line.
The major averages eventually ended the session in negative territory but well off their worst levels. The Dow slid 208.54 points or 0.7 percent to 30,772.79, the Nasdaq edged down 17.15 points or 0.2 percent to 11,247.58 and the S&P 500 fell 17.02 points or 0.5 percent to 3,801.78.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index climbed by 0.6 percent, while Hong Kong’s Hang Seng Index dipped by 0.2 percent.
Meanwhile, the major European markets have all shown significant moves to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.2 percent, the German DAX Index and the French CAC 40 Index are both down by 1.5 percent.
In commodities trading, crude oil futures are tumbling $1.53 to $94.77 a barrel after rising $0.46 to $96.30 a barrel a barrel on Wednesday. Meanwhile, after climbing $10.70 to $1,735.50 an ounce in the previous session, gold futures are sliding $24 to $1,711.50 an ounce.
On the currency front, the U.S. dollar is trading at 139.11 yen versus the 137.39 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0003 compared to yesterday’s $1.0059.
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