Thursday July 29th

29-07-2021

Dow futures remain 120 points higher, shrugging off disappointing economic data

U.S. stock index futures rose in Thursday morning trade despite disappointing economic data. Dow Jones Industrial Average futures gained 125 points. Meanwhile, S&P 500 futures rose 0.2% and Nasdaq 100 futures dipped 0.1% amid a drop in Facebook and PayPal shares. The U.S. second-quarter gross domestic product accelerated 6.5% on an annualized basis, considerably less than the 8.4% Dow Jones estimate. Meanwhile, a separate data point showed that 400,000 people filed initial claims for unemployment benefits for the week ended July 24. That level is nearly double the pre-pandemic norm and above a Dow Jones estimate of 385,000. Many investors were relieve that the Federal Reserve signaled no imminent plans for dialing back asset purchases. Fed Chairman Jerome Powell cautioned that although the economy is making progress toward its goals, it has a ways to go before the central bank would actually adjust its easy policies. “We have some ground to cover on the labor market side,” Powell said. “I think we’re some way away from having had substantial further progress toward the maximum employment goal. I would want to see some strong job numbers.” PayPal and Facebook fell 5% and 3% in premarket trading, respectively, after warning of significant growth slowdown as they reported quarterly earnings. Meanwhile, shares of Ford jumped nearly 4% after it raised its 2021 outlook, saying it’s selling more cars that are more expensive, though it missed analysts’ estimates on earnings. Amazon, Pinterest and Anheuser-Busch are set to report earnings Thursday. “The market is understanding we are having a blowout quarter here compared to a year ago,” said Michael Reynolds, vice president of investment strategy at Glenmede. “What’s much more important this season is the guidance we’re getting on quarters ahead, as the economy settles out into what might be the new normal.” The major averages are on track to end the month higher, with the S&P up 2.4% for July. The Nasdaq Composite and Dow are up 1.8% and 1.2%, respectively. Meanwhile, the Senate voted Wednesday to advance a bipartisan infrastructure plan, which would put $550 billion into transportation, broadband and utilities. Shares in Hong Kong continued to see a rebound on Thursday from a two-day slump earlier in the week. Meanwhile, Asia-Pacific markets rose after the U.S. Federal Reserve left its benchmark interest rate near zero. Hong Kong’s Hang Seng index jumped 3.3% to close at 26,315.32. The index had dived more than 8% over two days early this week. Mainland Chinese stocks also saw strong gains, with the Shanghai composite up 1.49% to close at 3,411.72 and the Shenzhen component surging 3.045% to finish the trading day at 14,515.32. In Japan, the Nikkei 225 advanced 0.73% to close at 27,782.42 while the Topix index gained 0.41% to finish the trading day at 1,927.43. Elsewhere, South Korea’s Kospi rose 0.18% on the day to 3,242.65. Oil prices rose on Thursday as crude stockpiles in the United States, the world’s top oil consumer, fell to their lowest since January 2020, with Brent crude oil prices pushing back past $75 a barrel. Brent crude oil futures were up 17 cents, or 0.2 %, at $74.91 a barrel, having traded as high as $75.55. U.S. West Texas Intermediate (WTI) crude oil futures were also up 17 cents, or 0.2 %, to $72.56 a barrel. Gold prices rose to a more than one-week high on Thursday after U.S. Federal Reserve Chairman Jerome Powell reassured investors that a rate hike is not on the cards anytime soon, sending the dollar to multi-week lows. Spot gold was up 0.8% to $1,821.31 per ounce by 5:29 a.m. ET. U.S. gold futures climbed 1.1% to $1,819.40 per ounce.