U.S. stock futures pointed to a higher open on Thursday, following a mixed performance in the previous session where the Dow Jones Industrial Average closed at a record high. Investors are closely watching corporate earnings and geopolitical developments, particularly concerning the Middle East and potential easing of tensions. Inflation remains a key focus, with Federal Reserve officials signaling readiness to act on interest rates if necessary.
Futures for the Dow Jones Industrial Average showed an uptick early Thursday, building on the blue-chip index's recent record close. Investors are keenly anticipating another wave of corporate earnings reports.
Dow futures climbed 113 points, or 0.21%. S&P 500 futures saw a 0.15% increase, while Nasdaq 100 futures experienced a slight dip of 0.19%.
In Wednesday's regular trading session, the Dow Jones Industrial Average advanced 263.24 points, or 0.49%, marking a new record close and extending its winning streak to five consecutive days. The S&P 500, however, pulled back by 0.17%, ending its four-day rally, and the Nasdaq Composite saw a decline of 0.83%.
Global Market Performance
Asian markets presented a mixed picture. Japan's Nikkei 225 slipped 0.51%, while the Topix saw a marginal rise. South Korea's Kospi dropped 1.84% at the open, although the smaller Kosdaq gained 0.15%. Australia's benchmark S&P/ASX 200 managed a slight increase of 0.1%.
Driving Factors: AI, Earnings, and Geopolitics
The U.S. market's earlier buoyancy was fueled by strong earnings reports and renewed optimism surrounding artificial intelligence. Nvidia, in particular, rallied over 3% after Elon Musk announced on SpaceX's earnings call that the company would exclusively use Nvidia chips for its AI infrastructure, a development that helped propel the Dow to its new high. However, a profit-taking sentiment later emerged, causing tech stocks, including Advanced Micro Devices and Alphabet, to struggle.
Katherine Bordlemay, co-head of Americas client portfolio management at Goldman Sachs Asset Management, commented on the robust earnings season. "Earnings are getting bigger, they're getting broader," she told CNBC's "Closing Bell: Overtime." "More encouraging is the breadth. We're seeing double-digit earnings growth coming from almost all sectors in the S&P." She highlighted that companies are demonstrating a strong return on investment from AI, with expanding margins and backlogs contributing to a positive earnings outlook.
Geopolitical developments also played a role, with easing tensions in the Middle East contributing to a cooling trend in oil prices.
Inflationary Concerns Persist
Despite positive market movements, inflation remains a key concern. Federal Reserve Governor Lisa Cook reiterated her readiness to act on interest rate hikes if signs of continued disinflation do not emerge. She warned that persistent above-target inflation risks becoming entrenched in price- and wage-setting behaviors, making it more difficult to control.
Upcoming Economic Data and Earnings
The market is looking ahead to a busy schedule of corporate earnings, with Warner Bros. Discovery reporting before the bell, and Airbnb and Lyft scheduled to release their results after market close. On the economic data front, weekly jobless claims are due Thursday morning, followed by the crucial July payrolls report on Friday.
Other Market Movers
SoftBank Posts Profit Beat
SoftBank reported a fiscal first-quarter profit that surpassed market expectations, largely driven by an $8.2 billion investment gain from Intel. Net profit for the June quarter totaled 347.3 billion Japanese yen ($2.2 billion), beating analyst estimates but representing an 18% year-on-year decline.
European Stocks Edge Higher
European stocks traded slightly higher, buoyed by optimism over a potential reopening of the Strait of Hormuz. The pan-European Stoxx 600 index was up 0.2%, with most regional markets and sectors in positive territory. Tech stocks showed stabilization after an earlier sell-off in Asia.
Gold Reaches Multi-Week High
Gold prices climbed to their highest level since late June, influenced by weaker-than-expected payroll data and hopes for the reopening of the Strait of Hormuz. Spot gold briefly surpassed $4,295 per ounce before settling around $4,262.
Oil Prices Slip
Oil prices dipped on Thursday amid signs of progress in Iran-Oman talks, which could pave the way for a broader U.S.-Iran agreement. Brent crude futures fell 0.34% to $79.18 a barrel, and U.S. West Texas Intermediate futures decreased by 0.52% to $74.83.
DBS Shares Hit Record High
Shares of DBS, Southeast Asia's largest bank, surged over 2% to a record high following strong second-quarter earnings. The bank reported a record net profit of S$3.08 billion ($2.41 billion), up 9% year-on-year.
TikTok Layoffs
TikTok is reportedly laying off 250 employees and closing its Nashville office, according to The New York Times. The closure is part of an effort to streamline operations.
Asian Markets Decline
Mainland China and Hong Kong indexes opened lower, mirroring broader losses in Asian markets. The Hang Seng index fell 1.79%, led by real estate and financial stocks.
Asian Tech Stocks Follow U.S. Trend
Asian technology stocks declined, tracking overnight losses in their U.S. counterparts. Companies like SoftBank Group, Tokyo Electron, and Advantest saw significant drops.
SpaceX Lock-up Expiration Looms
A key event for Elon Musk's SpaceX is the expiration of insider lock-up provisions on Thursday, allowing for the sale of a portion of their shares. This follows a significant drop in SpaceX's stock on Wednesday after reporting a sharp increase in capital expenditures related to AI investments.
After-Hours Movers
AppLovin shares plunged nearly 16% in extended trading due to disappointing third-quarter projections, while Western Digital saw a slump of over 10% on underwhelming current-quarter guidance.
— CNBC's Jeff Cox contributed to this report.
