The major U.S. index futures are currently pointing to a modestly higher open on Thursday, with stocks likely to regain ground following the pullback seen over the two previous sessions.
Traders may look to pick up stocks at somewhat reduced levels after the drop seen on Tuesday and Wednesday dragged the major averages down well off Monday's record closing highs.
Profit taking and worries about inflation contributed to the recent pullback after a Labor Department report showed consumer prices rose at their fastest annual rate in over thirty years in October.
Overall trading activity may be somewhat subdued, however, as some traders may stick to the sidelines amid the Veterans Day holiday.
While the stock markets will open as usual on the day, banks, federal offices and the bonds markets will all remain closed.
A notable decline by shares of Disney (DIS) may also limit a rebound by the Dow, with the entertainment giant slumping by 5.7 percent in pre-market trading.
The drop by Disney comes after the company reported third quarter results that missed analyst estimates on both the top and bottom lines. Disney+ subscriptions also came in below expectations.
Extending the pullback seen in Tuesday's session, stocks showed a notable move to the downside during trading on Wednesday. The major averages continued to give back ground after ending Monday's trading at record closing highs.
The major averages all closed firmly in the red, although the tech-heavy Nasdaq underperformed its counterparts. While the Nasdaq tumbled 263.84 points or 1.7 percent to 15,622.71, the S&P 500 slid 38.54 points or 0.8 percent to 4,646.71 and the Dow fell 240.04 points or 0.7 percent to 36,079.94.
Concerns about inflation contributed to the weakness on Wall Street after the Labor Department released a report showing consumer prices increased by more than expected in the month of October, lifting the annual rate of price growth to its highest level in over thirty years.
The report said the consumer price index jumped by 0.9 percent in October after rising by 0.4 percent in September. Economists had expected consumer prices to climb by 0.6 percent.
Excluding higher prices for food and energy, core consumer prices still increased by 0.6 percent in October after inching up by 0.2 percent in September. Core prices were expected to rise by 0.4 percent.
The Labor Department also said the annual rate of growth in consumer prices accelerated to 6.2 percent in October from 5.4 percent in September, reaching the highest level since November of 1990.
The annual rate of growth in core prices also accelerated to 4.6 percent from 4.0 percent, reflecting the biggest jump in prices since August of 1991.
The acceleration in the rate of consumer price inflation raised concerns about the outlook for interest rates even though the Federal Reserve has signaled it will not be in a hurry to begin raising rates.
"Strong demand and constrained supply will drive inflation higher in early 2022 which could lead the Fed to raise rates earlier than our December 2022 forecast," said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.
She added, "If inflation continues to outstrip expectations, the Fed might also accelerate its QE tapering, but for now we foresee consistent tapering through mid-2022."
Profit taking may also have contributed to the extended pullback, as some traders cashed in on stocks' recent run to record highs.
Meanwhile, a separate report released by the Labor Department showed another modest decrease in first-time claims for U.S. unemployment benefits in the week ended November 6th.
Jobless claims decreased for the sixth consecutive week, once again falling to their lowest level since hitting 256,000 in the week ended March 14, 2020.
Energy stocks turned in some of the market's worst performances on the day, as the price of crude oil moved sharply lower.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 5.1 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index tumbled by 2.8 percent and 2 percent, respectively.
Substantial weakness was also visible among semiconductor stocks, as reflected by the 2.8 percent nosedive by the Philadelphia Semiconductor Index. The index continued to give back ground after reaching a record intraday high in early trading on Tuesday.
Steel stocks also extended the sharp pullback seen on Tuesday, dragging the NYSE Arca Steel Index down by 2.4 percent to its lowest closing level in over seven months.
Housing, software and retail stocks also saw considerable weakness on the day, while gold stocks bucked the downtrend amid a notable increase by the price of the precious metal.
Commodity, Currency Markets
Crude oil futures are falling $0.63 to $80.71 a barrel after plummeting $2.81 to $81.34 a barrel on Wednesday. Meanwhile, after jumping $17.50 to $1,848.30 an ounce in the previous session, gold futures are climbing $15.50 to $1,863.80 an ounce.
On the currency front, the U.S. dollar is trading at 113.84 yen versus the 113.91 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1462 compared to yesterday's $1.1479.
Asia
Asian stocks ended mixed on Thursday after a U.S. consumer inflation report showed the largest annual increase in prices in three decades, stoking concerns over faster monetary policy tightening by the U.S. Federal Reserve.
Chinese shares posted strong gains after new bank lending in October exceeded estimates and media reports suggested that the government would take steps to ease the cash crunch for embattled developers.
Property stocks were boosted after reports that several bondholders had received overdue coupon payments from cash-strapped developer China Evergrande Group.
The benchmark Shanghai Composite Index jumped 40.32 points, or 1.2 percent, to 3,532.79, while Hong Kong's Hang Seng Index ended up 254.91 points, or 1 percent, at 25,251.05.
Japanese shares rose as investors awaited an economic stimulus package from newly elected Prime Minister Fumio Kishida. Investors shrugged off data showing that the country's wholesale inflation hit a four-decade high in October.
The Nikkei 225 Index gained 171.08 points, or 0.6 percent, to finish at 29,277.86, while the broader Topix ended 0.3 percent higher at 2,013.53. Tech stocks topped the gainers list, with Tokyo Electron, Advantest and Screen Holdings rising 1-2 percent.
Market heavyweight SoftBank Group rallied 1.9 percent and Uniqlo operator Fast Retailing added 0.7 percent.
Meanwhile, Australian markets ended lower for the fourth consecutive session as the latest jobs data showed an unexpected rise in unemployment in October.
The benchmark S&P/ASX 200 Index dropped 42 points, or 0.6 percent, to 7,381.90, while the broader All Ordinaries Index ended down 36.20 points, or 0.5 percent, at 7,701.20.
Banks Commonwealth and NAB both fell around 1.6 percent, while energy stocks such as Santos and Woodside Petroleum lost 2-3 percent, tracking overnight losses in crude oil prices.
Mining heavyweights BHP and Rio Tinto jumped 2.6 percent and 1.9 percent, respectively after debt-laden China Evergrande Group averted a destabilizing default. Smaller rival Fortescue Metals Group soared 8.2 percent.
Seoul stocks ended lower for the second straight day as a worrisome report on U.S. consumer price inflation fanned concerns about sooner-than-expected rate hikes.
The Kospi slipped 5.01 points, or 0.2 percent, to settle at 2,925.16. Tech, auto and bio stocks paced the declines, while leading car battery firm LG Chem advanced 2.4 percent.
Europe
European stocks have moved modestly higher in cautious trading on Thursday amid hopes that Beijing will take steps to ease the cash crunch for embattled developers.
Investors breathed a sigh of relief after cash-strapped developer China Evergrande Group averted a destabilizing default at the last minute for the third time in the past month.
While the U.K.'s FTSE 100 Index is up by 0.3 percent, the German DAX Index is up by 0.1 percent and the French CAC 40 Index is just above the unchanged line.
Aviva has moved higher. The insurer said it is on track to return at least 4 billion pounds ($5.41 billion) to shareholders and meet cost saving targets.
3i Group has also shown a strong move to the upside after the private equity company posted a rise in first-half pre-tax operating profits.
Engie SA shares have also risen. The French natural gas and electricity supplier and Crédit Agricole Assurances announced an agreement to acquire a 97.33 percent stake of Eolia Renovables from Canadian institutional investment manager Alberta Investment Management Corp.
German industrial services giant Bilfinger has also risen after appointing its new CEO, while SGL Carbon has surged as it reported improved earnings in the 9-month period on higher sales.
Delivery Hero has also advanced. The online food-delivery service reported that its third-quarter total segment revenues climbed 89 percent.
Sika has also moved sharply higher after it agreed to buy German rival MBCC Group for 5.5 billion francs ($6 billion).
Steelmaker Arcelor Mittal has also moved to the upside despite reporting slightly lower than expected third-quarter earnings.
Meanwhile, British retailer Burberry Group has slumped after maintaining its medium-term guidance for high single-digit top line growth.
Johnson Matthey shares have also plunged. The chemicals company said it would exit its battery materials business due to crushing competition. In addition, its current boss is stepping down.
The British pound has eased after official data showed the U.K. economy expanded at a slower pace in the third quarter.
Gross domestic product grew 1.3 percent sequentially in the third quarter, weaker than the 5.5 percent expansion seen in the previous quarter. Nonetheless, this was the second consecutive quarter of growth.
The level of GDP was 2.1 percent below where it was before the coronavirus pandemic at the end of 2019. On a monthly basis, GDP growth improved to 0.6 percent from revised 0.2 percent in August.
U.S. Economic Reports
No major U.S. economic data is scheduled to be released today due to the Veterans Day holiday.
Stocks In Focus
Shares of SoFi (SOFI) are moving sharply higher in pre-market trading after the digital financial services provider reported a narrower than expected third quarter loss.
Buy-now-pay-later firm Affirm (AFRM) is also seeing substantial pre-market strength after reporting better than expected fiscal first quarter revenues and announcing an expansion of its partnership with Amazon (AMZN).
On the other hand, shares of Beyond Meat (BYND) are likely to see initial weakness after the plant-based meat maker reported a wider than expected third quarter loss on revenues that came in below analyst estimates.
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