Futures Pointing To Sharply Lower Open On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a sharply lower open on Thursday, with stocks likely to come under pressure following the lackluster performance seen in the previous session.

A negative reaction to earnings news from Meta Platforms (META) is likely to weigh on Wall Street, as the Facebook parent is plunging by 15.5 percent in pre-market trading.

Meta Platforms reported first quarter results that beat estimates on both the top and bottom lines but provided disappointing second quarter revenue guidance.

Tech giant IBM Corp. (IBM) is also likely to come under pressure after reporting weaker than expected first quarter revenues. IBM also announced a deal to acquire HashiCorp (HCP) for $35 per share in cash, representing an enterprise value of $6.4 billion.

On the other hand, fellow Dow components Merck (MRK) and Honeywell (HON) are seeing pre-market strength after reporting first quarter results that exceeded analyst estimates.

The futures saw further downside following the release of a Commerce Department report showing the U.S. economy grew by much less than expected in the first quarter of 2024.

The Commerce Department said gross domestic product increased by 1.6 percent in the first quarter after surging by 3.4 percent in the fourth quarter of 2023. Economists had expected GDP to jump by 2.5 percent.

The notable slowdown in GDP growth primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending.

Stocks turned in a lackluster performance during trading on Wednesday following the strong upward move seen to start the week. After moving to the upside early in the session, the major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day narrowly mixed. While the Dow edged down 42.77 points or 0.1 percent to 38,460.92, the S&P 500 crept up 1.08 points or less than a tenth of a percent to 5,071.63 and the Nasdaq inched up 16.11 points or 0.1 percent to 15,712.75.

A positive reaction to the latest corporate earnings news initially contributed to an extended rebound on Wall Street following the considerable weakness seen last week.

Shares of Tesla (TSLA) spiked by 12.1 percent even though the electric vehicle maker reported weaker than expected first quarter results.

The surge by Tesla came after CEO Elon Musk said the company plans to start production of a new affordable model by early 2025.

Semiconductor company Texas Instruments (TXN) also saw significant strength after reporting first quarter results that beat expectations on both the top and bottom lines.

Shares of Visa (V) and Mattel (MAT) also moved to the upside after the companies reported better than expected quarterly results.

Buying interest waned shortly after the start of trading, however, with traders still worried about the outlook for interest rates ahead of next week's Federal Reserve meeting.

While the Fed is widely expected to leave interest rates unchanged, traders will be looking for clues about the possibility of future rate cuts.

Later this week, the Commerce Department is due to release a report on personal income and spending that includes readings on inflation said to be preferred by the Fed.

Traders may also have been reluctant to make significant moves ahead of more big-name tech earnings in the coming days.

On the U.S. economic front, the Commerce Department released a report showing new orders for U.S. manufactured durable goods surged by more than expected in the month of March.

The report said durable goods orders soared by 2.6 percent in March after climbing by a downwardly revised 0.7 percent in February.

Economists had expected durable goods orders to spike by 2.3 percent compared to the 1.3 percent jump that had been reported for the previous month.

Excluding a surge in orders for transportation equipment, durable goods orders crept up by 0.2 percent in March after inching up by 0.1 percent in February. Ex-transportation orders were expected to rise by 0.3 percent.

Transportation stocks showed a substantial move to the downside on the day, dragging the Dow Jones Transportation Average down by 2.3 percent.

Considerable weakness was also visible among housing stocks, as reflected by the 1.2 percent loss posted by the Philadelphia Housing Sector Index.

Pharmaceutical and retail stocks also saw some weakness, while semiconductor stocks turned in a strong performance following the upbeat results from Texas Instruments.

Reflecting the strength in the semiconductor sector, the Philadelphia Semiconductor Index climbed by 1.1 percent on the day.

Commodity, Currency Markets

Crude oil futures are climbing $0.45 to $83.26 a barrel after falling $0.55 to $82.81 a barrel on Wednesday. Meanwhile, after slipping $3.70 to $2,338.40 an ounce in the previous session, gold futures are edging down $1 to $2,337.40 an ounce.

On the currency front, the U.S. dollar is trading at 155.63 yen versus the 155.35 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0695 compared to yesterday's $1.0699.

Asia

Asian stocks fell in thin holiday trading on Thursday, with the Australian and New Zealand markets closed for Anzac Day.

Investor sentiment was hit as Facebook parent Meta Platforms posted better-than-expected earnings but warned that expenses would be higher this year due to "aggressive" spending on artificial intelligence (AI).

Investors also looked ahead to the release of U.S. GDP data for the first quarter as well as earnings reports from major companies across various sectors, including tech giants like Intel, Microsoft, and Alphabet, for more direction.

Chinese stocks edged up slightly, with the benchmark Shanghai Composite Index rising 0.3 percent to 3,052.90.

Hong Kong's Hang Seng Index rose 0.5 percent to 17,284.54 after reports global funds are raising their allocation to China on hopes for economic and earnings recovery.

Japanese markets tumbled as the yen weakened beyond 155 per dollar for the first time in more than three decades, raising speculation about the Bank of Japan intervening in the forex market to prop up the ailing currency.

The Nikkei 225 Index plunged 2.2 percent to 37,628.48 after a three-day rally. The broader Topix Index dropped 1.7 percent to 2,663.53 as the Bank of Japan kicked off its two-day policy meeting.

Tech stocks and exporters lost ground, with SoftBank Group, Advantest, Tokyo Electron and Toyota Motor falling 2-3 percent.

Camera maker Canon lost 8.4 percent after posting a drop in first-quarter operating profit. Robot maker Fanuc tumbled 3.4 percent after its annual profit forecast came in below expectations.

Seoul stocks fell sharply, with the Kospi average ending down 1.8 percent at 2,628.62. Nvidia supplier SK Hynix plummeted 5.1 percent despite returning to a profit in the first quarter on the back of rising global demand for premium memory chip products used for AI computing.

Data showed earlier in the day that the South Korean economy grew at the fastest pace in more than two years in the first quarter on robust exports.

Europe

European stocks are mixed on Thursday as a disappointing earnings report from Facebook parent Meta Platforms gave way to caution ahead of earnings results from some of biggest and most important growth and tech companies in the U.S.

U.K. stocks have outperformed on the back of strong earnings reports and news of a takeover approach for Anglo American.

While the U.K.'s FTSE 100 Index is up by 0.7 percent, the German DAX Index is down by 0.5 percent and the French CAC 40 Index is down by 0.8 percent.

Anglo American has soared after mining giant BHP Group proposed a takeover of the rival in a deal that seeks to create world's biggest copper miner with around 10 percent of global output.

Online takeaway food company Delivery Hero has also surged after reporting strong first quarter results and raising its full-year revenue outlook.

Sanofi has also jumped. The pharmaceutical giant reiterated its outlook for 2024 adjusted earnings per share (EPS) to decrease by a low single-digit percentage, excluding currency fluctuations.

Barclays has also moved sharply higher in London after the lender reported a smaller-than-expected drop in first-quarter profit.

Unilever has also rallied. The consumer goods giant beat first-quarter sales forecasts and kept its full-year guidance for underlying sales growth within its multi-year range of 3-5 percent.

Meanwhile, Deutsche Bank shares have fallen despite the German lender posting better-than-expected profit growth in the first quarter amid an ongoing recovery in its investment banking unit.

French spirits maker Pernod Ricard has also tumbled after reporting worse than expected fiscal third quarter sales.

Software maker Dassault Systemes has also moved sharply lower despite reporting solid first-quarter results and backing guidance.

Nestle has also moved to the downside after the Swiss food and drinks giant missed first-quarter organic sales growth estimates.

In economic news, German consumer confidence is set to rise again in May, a survey conducted by the market research group GfK and the Nuremberg Institute for Market Decisions (NIM) showed earlier today.

The forward-looking consumer sentiment index rose to -24.2 in May from revised -27.3 in April. The reading was expected to rise moderately to -25.9.

French manufacturing confidence weakened in April largely due to the worsening order books, monthly survey results from the statistical office INSEE revealed.

The manufacturing confidence index fell more-than-expected to 100 in April from an upwardly revised 103 in March. The reading was seen at 102.

U.S. Economic Reports

The Labor Department released a report on Thursday showing an unexpected decrease by first-time claims for U.S. unemployment benefits in the week ended April 20th.

The report said initial jobless claims fell to 207,000, a decrease of 5,000 from the previous week's unrevised level of 212,000. The dip surprised economists, who had expected jobless claims to inch up to 214,000.

The Labor Department said the less volatile four-week moving average also edged down to 213,250, a decrease of 1,250 from the previous week's unrevised average of 214,500.

A separate report released by the Commerce Department on Thursday showed the U.S. economy grew by much less than expected in the first quarter of 2024.

The Commerce Department said gross domestic product increased by 1.6 percent in the first quarter after surging by 3.4 percent in the fourth quarter of 2023. Economists had expected GDP to jump by 2.5 percent.

The notable slowdown in GDP growth primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending.

At 10 am ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of March. Pending home sales are expected to rise by 0.3 percent in March after jumping by 1.6 percent in February.

The Treasury Department is due to announce the results of this month's auction of $44 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Shares of American Airlines (AAL) are moving sharply higher in pre-market trading after the airline reported a wider than expected fiscal quarter loss but provided upbeat earnings guidance for the current quarter.

Restaurant chain Chipotle Mexican Grill (CMG) is also likely to see initial strength after reporting first quarter results that exceeded expectations.

On the other hand, shares of Southwest Airlines (LUV) are plummeting in pre-market trading after the airline reported disappointing first quarter results and warned about the impact of Boeing's (BA) airplane delays.

Construction equipment maker Caterpillar (CAT) may also come under pressure after reporting first quarter earnings that beat estimates but weaker than expected revenues.