4:11 pm: Morning optimism can't make it to the close
The Dow closed Thursday down 249 points, 0.7%, at 33,670, the Nasdaq Composite lost 121 points, 1%, to 11,790 and the S&P 500 dropped 36 points, 0.9%, to 4,082. The small-cap focused Russell 2000 declined 25 points, 1.3%, to 1,917.
The benchmarks all ended lower after starting the session in the green.
“Wall Street couldn’t keep the upbeat mood,” said Ed Moya, senior market analyst at Oanda, as reported by CNBC. “Some traders placed bets that the Fed will have to do a lot more tightening than what Wall Street is pricing in.”
Shares of Alphabet continue to be a drag on the Nasdaq following a failed demonstration by its AI chatbot Bard AI. Even after dropping almost 8% on Wednesday, crashing its valuation by about $100 billion, Alphabet shares fell another % on Thursday following the public embarrassment.
12.05pm: Disney financial results beat expectations
US stocks were higher in noon trading on corporate earnings optimism and an upbeat report from Disney.
At midday, the Dow rose 79 points to 34,028, while the S&P 500 added 9 points at 4,127 and the tech-heavy Nasdaq gained 38 points to 11,948.
“Disney really is what got the animal spirits going,” Infrastructure Capital Management chief investment officer Jay Hatfield chief investment officer said.
“These large-cap reporters are really what drive the market,” he added.
Shares of The Walt Disney Company gained more than 2% after the company reported better-than-expected revenue and earnings and revealed plans to cut $5.5 billion in costs.
9.35am: Stocks push higher as optimism returns
Investor confidence had returned on Thursday morning boosted by better-than-expected corporate earnings from the likes of Siemens of AstraZeneca, with the three major indices starting the day in positive territory.
Just after the market opened, the tech-laded Nasdaq Composite was leading the charge higher up 128 points or 1.1% at 12,034 points, the Dow Jones Industrial Average had added 227 points or 0.7% at 34,176 points, and the S&P 500 was up 32 points or 0.8% at 4,150 points.
City Index and FOREX.com market analyst Fawad Razaqzada said that it appeared investors were cheering any piece of good news that came their way.
“Today, sentiment was boosted after latest German inflation data showed an unexpected cooling to 9.2%, down from 9.6% and well below forecasts of a return to double-digit inflation of 10%,” he said.
“In addition, the lack of any further negative news encouraged the bears to cover some of their short bets, alleviating pressure from indices and beaten down currency pairs.”
Meanwhile, initial jobless claims for last week came in at 196,000, up from 183,000 a week earlier, above the consensus expectation of 190,000, and marking the first increase in six weeks.
Pantheon Macroeconomics chief economist Ian Shepherdson said that the level of claims remained very low but the numbers were striking as unadjusted claims underperformed, relative to the three most recent years when February 4 fell on a Saturday, the most since early November.
“A single observation proves nothing, but it is striking that this reading comes in the first colder-than-usual week since the polar vortex swept across the country in the week before Christmas,” he said.
Shepherdson added that the strength of January payrolls was due to lower layoffs than usual for the month, and these data support, at the margin, Pantheon’s view that the relatively mild winter weather was a big part of the story.
“Our take on the seasonals suggests that claims will be little changed over the next couple weeks, so further increases in claims would get our attention,” he said.
“The bigger picture here, though, is that the surge in layoff announcements reported in the Challenger survey will pass through into claims by late winter/early spring, allowing for the usual lags."
6.30am: Weekly unemployment claims also in focus
Wall Street is expected to open higher as investors continue to digest corporate earnings reports and look ahead to weekly jobless claims that are expected to reaffirm a strong labor market in the US.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.7% in Thursday pre-market trading, while those for the broader S&P 500 index gained 0.8%, and contracts for the Nasdaq-100 added 1.2%.
Walt Disney, which reported quarterly earnings after the closing bell, jumped 6.5% in after-hours trading after it announced plans to cut 7,000 jobs as part of a shake-up of the entertainment giant.
Mixed earnings reports saw US stocks closing lower on Wednesday as Federal Reserve officials also emphasised the need for more interest rate hikes to tame inflation.
The DJIA ended 0.6% lower at 33,949, the Nasdaq Composite fell 1.7% to 11,911 and the S&P 500 lost 1.1% to 4,118. Google parent Alphabet sank more than 7% after the company's AI chatbot answered a question incorrectly in a demonstration.
“Wall Street may have faced something of a shakedown on Wednesday, but sentiment is looking a little more optimistic after traders digested last night’s earnings news,” commented James Hughes, chief market analyst at Scope Markets.
“Futures suggest the Dow is currently on track to more than recover yesterday’s losses and there’s also a general level of support building for the idea that many big tech stocks are moving into oversold territory so could start to attract bargain hunters as they eye the next run higher,” he added.
Hughes noted that a slew of speeches from Fed officials on Wednesday also managed to strike a slightly more balanced tone so while there’s more pain to come, it might not be too onerous.
“Earnings highlights today include PayPal, Phillip Morris, Lyft, Kellogg and PepsiCo whilst economic data is a little more subdued,” Hughes said. “Markets will also be watching whether Alphabet manages to find some upside after yesterday’s AI launch problems.”
Weekly unemployment claims data are forecast to reaffirm a strong labour market. Markets expect initial claims to nudge higher towards 195,000 - admittedly still at very low levels - despite nascent signs of significant job losses as witnessed by job cuts seen across the tech sector, according to TickMill Group market analyst Patrick Munnelly.