Thursday October 21st

21-10-2021

Stock futures slip after Dow retakes record high

U.S. stock index futures declined in early trading on Thursday after the blue-chip Dow Jones Industrial Average retook its record high in the prior session amid solid corporate earnings. Dow futures fell 104 points, or 0.2%. S&P 500 futures shed 0.2% and Nasdaq 100 futures lost 0.2%. IBM shares lost more than 4% in premarket trading following a revenue miss in the third quarter. Its top two business segments — global services and the Cloud & Cognitive Software business — fell short of estimates. Tesla shares dipped by 1% in premarket trading even after the electric-car maker posted record earnings and revenue in the third quarter that beat expectations. American Airlines added more than 1% in early morning trading after it reported an adjusted loss but better than expected revenue for the third quarter. The Labor Department reported 290,000 initial jobless claims for the week ending Oct. 16, which is down from the previous week by 6,000 and lower than the 300,000 estimated by economists surveyed by Dow Jones. Investors are watching to see if jobless claims continue to fall, as the Federal Reserve has indicated it will start to normalize its monetary policy as the central bank nears its economic goals. The Dow jumped about 150 points to hit an intraday record Wednesday, surpassing its peak from mid-August. It fell just short of its closing record. The S&P 500 climbed 0.4% for its sixth straight positive day and sits just 0.2% below its all-time high. The tech-heavy Nasdaq Composite closed Wednesday’s session slightly lower, however. “The Dow traded to a new all-time high today, again showing the resilience of dip buyers and the importance of cyclical companies in the stock market rally,” said Chris Zaccarelli, CIO at Independent Advisor Alliance. Investors have been monitoring the third-quarter earnings season to assess profit growth as well as signs of cost pressures and supply-chain disruptions for the rest of the year. Of the approximately 70 S&P 500 companies that have reported results so far, 86% posted earnings that topped analysts expectations, according to Refinitiv. “There are no signs of widespread erosions of margins at the moment. Perhaps there is so much money sloshing about that for now prices are broadly being passed on,” Jim Reid, head of thematic research at Deutsche Bank, said in a note. Railroad giant CSX jumped more than 3% in extended trading following a stronger-than-expected earnings report. On Wednesday, the Food and Drug Administration authorized booster shots of both Johnson & Johnson and Moderna’s Covid vaccines, a critical step in distributing extra doses to tens of millions of people. U.S. regulators also approved “mixing and matching” vaccines. Stocks in Asia-Pacific were mixed on Thursday, as investors monitored shares of developer China Evergrande Group in Hong Kong. Evergrande shares dropped 12.54%, having returned to trade on Thursday after a halt that lasted more than two weeks. The Hang Seng Properties index climbed 2.02% to 31,488.41. The broader Hang Seng index in Hong Kong slipped 0.45% on the day to 26,017.53. Mainland Chinese stocks closed mixed, with the Shanghai composite up 0.22% to 3,594.78 while the Shenzhen component dipped fractionally to 14,444.86. In Japan, the Nikkei 225 led losses among the region’s markets as it slipped 1.87% to close at 28,708.58 while the Topix index fell 1.32% to 2,000.81. South Korea’s Kospi edged 0.19% lower, closing at 3,007.33. Oil hit a three-year high above $86 a barrel on Thursday driven by tight supply and a global energy crunch, although prices eased as some investors took profits on signs the rally is looking overstretched. Helping to drive the latest gain, a supply report from the U.S. Energy Information Administration on Wednesday showed crude and fuel inventories tightened, with crude inventories at the Cushing storage hub falling to a three-year low. Brent crude rose as high as $86.10, the highest since October 2018, but later was down 99 cents, or 1.15%, to $84.83. U.S. West Texas Intermediate crude fell 70 cents, or 0.84%, to $82.72. Gold prices inched up on Thursday, extending gains into a third session as a softer dollar made the metal cheaper for buyers holding other currencies. Spot gold rose 0.2% to $1,784.96 per ounce by 0146 GMT. U.S. gold futures were little changed at $1,784.60. Bullion prices have traded between $1,759 and $1,788 this week. A weaker dollar on Thursday kept the metal close to the higher end of this range.