Nasdaq poised to jump on earnings report

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U.S. equity futures moved higher in early Thursday trading, matching gains for both the dollar and Treasury bond yields, as investors looked to a key set of data releases and a pivotal overseas interest rate decision. Retail sales powered higher last month, according to a Commerce Department report, rising 0.4% to a collective total of $714.4 billion. This figure firmly topped forecasts but added to concerns over inflationary pressures.

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Stock futures extended gains following the data release, as traders bet that the robust spending supports the world’s biggest economy, potentially influencing the Federal Reserve’s rate cut considerations. A separate Labor Department report showed the number of Americans filing for initial jobless benefits fell by 19,000 to 241,000 over the week ending October 12, the most substantial drop in three months. Futures indicated the Dow Jones Industrial Average would add 80 points, while the Nasdaq was expected to jump 130 points.

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Benchmark 10-year Treasury note yields rose 4 basis points to 4.069% following the data release, while 2-year notes were up 4 basis points to 3.993%. The European Central Bank (ECB) lowered its benchmark deposit rate by 25 basis points to 3.25% following a two-day meeting in Frankfurt, marking the first set of back-to-back rate cuts in 13 years. This decision, which was largely anticipated by the markets, followed data showing headline inflation in the currency area fell to 1.7% last month, with core pressures easing to 2.7%. Stocks ended higher on Wednesday, powered by significant gains in bank and transport stocks.

Nasdaq poised to surge on data

However, gains were partially capped by political uncertainty related to the deadlocked U.S. presidential election. Investors remain focused on navigating key economic readings for September, including retail sales and jobless claims data. Bond markets have been reacting to the potential policy impacts from both presidential candidates, which are expected to add to the country’s record debt and deficits, raising inflation concerns. Benchmark 10-year Treasury note yields were last marked 3 basis points higher at 4.042%, while 2-year note yields traded at 3.953%. In overseas markets, European stocks were higher heading into the ECB rate decision, with the Stoxx 600 rising 0.49% and Britain’s FTSE 100 gaining 0.34% in London. Overnight in Asia, another disappointing government briefing on stimulus plans sent Chinese shares tumbling, with the CSI falling 1.1% and stocks in Shenzhen down 0.73%. Japan’s Nikkei 225 ended the session 0.69% lower due to declines in chip stocks ahead of the TSMC earnings report. On Wall Street, early gains were led by chip stocks, following a stellar set of third-quarter earnings from Taiwan Semiconductor Manufacturing Company (TSMC). The world’s largest contract chipmaker reported record profits of T$325.3 billion (US$10.06 billion), forecasting a 30% growth rate for 2024, driven by robust demand for AI technologies. Netflix shares are also in the spotlight as the online streaming giant prepares to release its third quarter earnings update after the closing bell. Analysts are revisiting their price targets for Netflix stock in anticipation of the earnings report.