Thursday October 28th

28-10-2021

Stock futures rise after strong earnings from Ford, shrug off disappointing GDP report

U.S. stock index futures edged higher in premarket trading Thursday, a day after after the S&P 500 and the Dow Jones Industrial Average slipped from their record highs and as Wall Street looked to more earnings news and an important read on economic growth. Dow futures rose 65 points. S&P 500 futures and Nasdaq 100 futures both traded in solidly positive territory. Ford saw its shares jump more than 9% on blockbuster earnings while also raising guidance. The automaker said increased availability of semiconductors during the quarter allowed it to ramp up production. Shares of Twilio fell around 13% in after-hours trade, despite a beat on both earnings and revenue for the third quarter, after the cloud communications platform projected a fourth-quarter loss. Ebay also fell by about 5% on weak fourth-quarter revenue guidance. Pharmaceutical giant and Dow component Merck saw its shares rise nearly 1% premarket after the company posted an earnings beat on the top and bottom lines. Fellow bluechip index company Caterpillar topped profit estimates but fell just shy on revenue, sending its shares up nearly 2%. The move higher for futures came despite a disappointing economic report on Thursday. GDP growth for the third-quarter came in at 2.0%, below the 2.8% expected. The reading marks a slowdown from 6.7% growth in the second quarter. On a more positive note for the economy, weekly initial jobless claims came in at 281,000. Economists surveyed by Dow Jones were expecting 289,000 claims. The market will be getting more big earnings news, with tech giants Amazon and Apple reporting after the closing bell. NBC Universal and CNBC.com parent Comcast posted a solid earnings beat before the bell, sending shares up 3.4%. Nearly 40% of S&P 500 companies have  reported earnings and more than 80% of them beat Wall Street expectations, according to CNBC calculations. S&P 500 companies are expected to grow profit by about 37.6% in the third quarter. “Earnings have helped and a reminder that US reporting so far has been better than the long-term average in terms of beats,” Jim Reid, head of thematic research at Deutsche Bank, said in a note. “It has still been healthier relative to some of the stagflationary gloom stories seen through September and early October which has perhaps helped the relief rally.” Investors awaited the first estimate for third-quarter annualized gross domestic product growth from the Commerce Department. Economists polled by Dow Jones expected an increase of just 2.8% as products remained stranded at normally bustling ports, employers struggled to find workers and consumers battled with inflation. Wall Street was also monitoring events in Washington, where Democrats and President Joe Biden appear to be nearing a deal on a social spending bill. NBC News reported that Biden will unveil details of the deal later on Thursday morning. On Wednesday, the S&P 500 slipped 0.5% for its first down day in three as the rally on a strong earnings season started to ease. The blue-chip Dow dipped more than 250 points, falling for the first time in four days. Major averages have been marching higher on earnings momentum this month. The S&P 500 has gained 5.6% in October, on pace to post its best month since November 2020. The Dow is up 4.9% this month, while the tech-heavy Nasdaq Composite has rallied 5.5%. Shares in Asia-Pacific were lower on Thursday as the Bank of Japan announced its decision to hold steady on monetary policy. The Nikkei 225 in Japan declined 0.96% to close at 28,820.09 while the Topix index shed 0.7% to 1,999.66. Mainland Chinese stocks also closed lower, with the Shanghai composite slipping 1.23% to 3,518.42 and the Shenzhen component dipped 1.033% to 14,244.82. Hong Kong’s Hang Seng index shed 0.28% to end its trading day at 25,555.73. Elsewhere, South Korea’s Kospi slipped 0.53% on the day to 3,009.55. Oil prices slumped to their lowest in two weeks after official figures showed a surprise jump in U.S. inventories of crude, and rising cases of Covid-19 in Europe, Russia, and some outbreaks of infections in China dented hopes for an economic recovery. Brent crude dropped $1.21, or 1.4%, to $83.41 a barrel, having hit a two-week low of $82.32 earlier and fallen by 2.1% in the previous session. U.S. oil fell $1.16, or 1.4%, to $81.52 a barrel, also a one-week low, after dropping 2.4% on Wednesday. Gold prices consolidated slightly above the key $1,800 level on Thursday, supported by softer U.S. bond yields as investors focused on how central banks respond to rising price pressures. Spot gold rose 0.3% to $1,802.40 per ounce by 0727 GMT. U.S. gold futures gained 0.3% to $1,803.90.