U.S. stock-index futures were modestly lower Thursday morning as investors dug through a heavy round of corporate earnings reports and parsed a better-than-expected report on weekly jobless benefit claims.
What are major indexes doing?
On Wednesday, stocks ended higher after back-to-back declines, with the Dow DJIA rising 316.01 points, or 0.9%. The S&P 500 SPX gained 0.9%, while the tech-heavy Nasdaq Composite COMP jumped 1.1%. The small-cap Russell 2000 index RUT jumped 2.4%.
What’s driving the market?
Stock futures prices were steady early Thursday after Wednesday saw a resurgence of the reflation trade — bets that sectors set to benefit from an economic reopening will outperform other assets — with gains for energy, materials and financials leading gains for the S&P 500 while the small-cap Russell 2000 outperformed its blue-chip peers, noted Han Tan, market analyst at FXTM.
“It is only natural to expect markets to take a breather after posting a string of record highs earlier in the month. After all, technical indicators had been highlighting overbought conditions of late,” he said, in a note.
But with the Cboe Volatility Index VIX, a measure of expected volatility for the S&P 500, trading below 20 and near its long-term average and 10-year Treasury yields BX:TMUBMUSD10Y steady after falling back from 14-month highs, the environment remains conducive for further stock market gains, Tan said.
“The rebound in markets yesterday was impressive, although the bounce back was devoid of a major catalyst just like Tuesday’s selloff wasn’t really “caused” by much
other than a market that’s getting complacent and was short-term stretched,” said Tom Essaye, author of “The Sevens Report.”
“But as has been the case with every other dip this year, buyers were there to step back in. The bottom line is this market remains resilient and it’s going to take materially negative news on the timing of the economic recovery or Fed tapering to break this Pavlovian response to buy every dip.”
As expected, the European Central Bank left policy unchanged following its Governing Council meeting. ECB President Christine Lagarde will hold a news conference at 8:30 a.m.
Investors also got the latest weekly tally on applications for U.S. unemployment benefits at 8:30 a.m. First-time claims fell by 39,000 to 547,000 in the week ended April 17, the lowest since before the pandemic struck. Continuing claims fell 34,000 to 3.67 million as of April 10.
Data on U.S. March existing home sales is due at 10 a.m., with the seasonally adjusted annual pace expected to slow to 6.11 million from 6.22 million in February. March leading economic indicators are also due at 10 a.m.
Which companies are in focus?
How are other assets performing?