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US stock index futures edged higher on Thursday morning as investors reacted positively to a slew of earnings reports and focused on the US jobless claims data.
Shares of Walt Disney Co. rose sharply on better-than-expected results for the last quarter which came on the back of a restructuring plan that included job cuts and cost savings.
Robinhood Markets Inc. jumped amid high revenue. S&P 500 and NASDAQ futures gained between 0.3% and 0.5% in premarket trading, while European stocks posted the second day of gains. Investors were encouraged to buy new risky assets as the largest companies Siemens AG and AstraZeneca Plc published results that exceeded economists' expectations. The Asian index rose thanks to the growth of Chinese and Hong Kong stocks.
US 10-year Treasury yields continued to decline as markets calmed down after the euphoria caused by a possibility of more tightening from the Fed. New York Fed President John Williams said yesterday that the forecasts released by officials in December are still a good guide to where interest rates are heading this year and that they may need to stay capped a little longer - within a few years - to reduce inflation.
Investors will be keeping a close eye on the US data today, including the report on initial jobless claims. The labor market has been turning everything upside down lately, and investors will be looking for more evidence as to what the Fed's next policy will be. Some Fed officials have confirmed that interest rates will have to continue to rise. Interest rate futures have gone higher which means that the rate is expected to rise beyond the Fed's estimates of 5.1%. Some options traders are even betting that the US benchmark rate will reach 6%. But there is much more faith that the Fed will not cut interest rates at the end of this year, which adds rigidity to its policy.
Adani Enterprises Ltd. shares, which have already suffered losses, fell again, ending a two-day gain after MSCI Inc. said it is reviewing the number of shares associated with the Adani Group that are freely traded on exchanges. Oil has stabilized after gaining about 7% in the previous three sessions.
As for the technical outlook for the S&P 500, the demand for risk assets is clearly preserved. The index may continue to grow but it first needs to consolidate above $4,150. Another important target for bulls will be the level of $4,180 which will allow the bullish trend to continue. Only after that can we expect a more confident upward movement with the potential to settle at $4,208. A little higher is the level of $4,229, which will be quite difficult to overcome. In the case of a downward movement and lower demand, buyers simply have to assert their strength in the area of $4,116. Its breakout will quickly push the trading instrument to $4,090 and open the way to $4,064.
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