Attention Shifts To Fed Speeches After BoE's Dovish Stance

(RTTNews) - The major U.S. index futures are pointing to a higher opening on Thursday, with some positive earnings and deal news supporting sentiment. The jobless claims report for the recent reporting week showed a bigger than expected increase in claims. The markets may also receive encouragement from indications from the Bank of England that it is in no hurry to raise interest rates, which cast doubts on a potential Fed rate hike this year. The focus now shifts to a slew of Fed speeches scheduled for the day.

U.S. stocks were spooked by a pullback in crude oil prices and hawkish Fed comments, ending Wednesday's session modestly lower. The major averages opened higher and saw volatility in early trading. Thereafter, the Dow Industrials and the S&P 500 Index languished below the unchanged line before ending lower. The Dow Industrials lost 50.57 points or 0.28 percent before ending at 17,868 and the S&P 500 Index closed 7.48 points or 0.35 percent lower at 2,102. The Nasdaq Composite managed to briefly sneak back above the unchanged line in late trading but retreated yet again and ended down 2.65 points or 0.05 percent at 5,143.

Sixteen of the thirty Dow components closed lower, while fourteen stocks advanced. UnitedHealth (UNH), Disney (DIS), Pfizer (PFE), Chevron (CVX) and Exxon Mobil (XOM) were among the biggest decliners of the session.

Among the sectors, gold, airline, basic material and oil service stocks came under significant selling pressure.

On the economic front, ADP's private payroll survey showed that the private sector added 182,000 jobs in October, less than the 190,000 estimated by economists.

The Commerce Department reported that the U.S. trade deficit narrowed to $40.8 billion in September from a downwardly revised deficit of $48 billion in August. The deficit was the smallest since February.

Exports were up 1.6 percent month-over-month, while imports fell 1.8 percent, as petroleum import prices were at the lowest level since May 2004. The deficit on petroleum trade dropped to the lowest levels since December 2001.

Markit's final estimate showed that U.S. service sector growth slowed in line with estimates, with a PMI score of 54.8 for October compared to 55.1 in September.

Meanwhile, the Institute for Supply Management's national survey showed that service sector growth saw an acceleration in October. The non-manufacturing index rose to 59.1 in October from 56.9 in September, while economists expected a reading of 56.7. Fourteen industries reported growth in the month.

The new orders index rose 5.3 points to 62, the production index was up 2.8 points to 63 and the order backlogs index was unchanged at 54.5. Additionally, the employment index edged up 0.9 points to 58.3.

Currency, Commodity Markets

Crude oil futures are rising $0.06 to $46.38 a barrel after slumping $1.58 to $46.32 a barrel on Wednesday.

The previous session's pullback came amid concerns about the outlook for interest rates and the release of the weekly petroleum status report.

Crude oil stockpiles rose by 2.8 million barrels to 482.8 million barrels in the week ended October 30th. Inventories remained near levels not seen for this time of year in at least the last 80 years.

Meanwhile, distillate stockpiles declined by 1.3 million barrels but were in the middle of the average range for this time of the year. Gasoline inventories fell by 3.3 million barrels but remained above the upper limit of the average range.

Refinery capacity utilization averaged 87.2 percent over the four weeks ended October 30th compared to 86.9 percent over the four weeks ended October 23rd.

Gold futures are adding $1.30 to $1,107.50 an ounce. In the previous session, the December futures ended at $1,106.20 an ounce, down $7.90.

Among currencies, the U.S. dollar is trading at 121.45 yen compared to the 121.57 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0875 compared to yesterday's $1.0866.

Asia

The major Asian markets ended mixed, as the Australian, Indonesian, South Korean and Taiwanese markets retreated, while most other major markets advanced. The lackluster close on Wall Street and the Fed's rate hike chatter kept the mood subdued even as the Japanese and Chinese markets rose.

Japan's Nikkei 225 Index opened higher but gave back some of its gains in the morning only to advance yet again until the mid-session. Thereafter, the index moved roughly sideways before ending up 189.50 points or 1 percent at 19,116.

A majority of stocks advanced in the session, led by export stocks, which reacted to the yen's weakness in the wake of the dollar strengthening. Japan Tobacco rallied strongly, while Mitsubishi and Toshiba moved notably to the downside.

China's Shanghai Composite Index rallied 63.18 points or 1.83 percent before ending at 3,523. The index moved into bull market territory by virtue of its 20 percentage-plus advance from its late August lows.

Meanwhile, Hong Kong's Hang Seng Index ended a volatile session down merely 2.53 points or 0.01 percent at 3,523.

Australia's All Ordinaries Index languished below the unchanged line for much of the session before ending down 46.90 points or 0.89 percent at 5,248.

The market witnessed broad based weakness, with consumer, financial, real estate, material and utility stocks leading the declines.

On the economic front, Indonesian third quarter growth was slightly less than expected, as exports suffered due to low commodity prices.

The minutes of the Bank of Japan's October Monetary Policy Board meeting showed that the central bank is of the view that the economic recovery remains on track even as exports took a hit from a slowdown in some emerging economies.

Although expecting inflation to be flat in the near term due to falling commodity prices, the bank continues to hold 2 percent as its inflation target. At the meeting, belying expectations from some quarters, the bank did not infuse additional stimulus.

Europe

After a mixed start, European stocks fell further in early trading, as traders digest some domestic corporate news and economic readings, including disappointing German factory orders data. However, the mood was uplifted by the Bank of England's dovish stance.

Policymakers of the Bank of England decided to hold the key interest rate at a record low again in a split vote and also downgraded its economic growth and inflation forecasts. The Monetary Policy Committee headed by Mark Carney voted 8-1 to hold the interest rate at 0.50 percent, the bank said in a statement.

Policymakers voted unanimously to maintain quantitative easing at GBP 375 billion. Output growth is expected to be at 0.6 percent in the fourth quarter, the bank said in its quarterly Inflation Report. Going forward, growth is forecast to remain at around this rate.

The bank expects the economy to grow 2.7 percent this year and 2.5 percent in 2016. The growth is then projected to improve to 2.7 percent in 2017. In the August report, the bank had projected 2.8 percent growth for 2015 and 2.6 percent the next year. Inflation is projected to pick up over coming months, but less quickly than projected in August, the BoE noted.

The central bank estimated CPI inflation to rise to 0.4 percent in December, and to 0.7 percent in March 2016. Inflation is expected to return to the 2 percent target in around two years.

In corporate news, Societe Generale reported higher third quarter net income, helped by retail lending. Peer Credit Agricole's third quarter earnings also increased year-over-year.

Athletic apparel giant Adidas also reported higher third quarter earnings, thanks to a strong performance in the U.S.

Deutchse Telecom's third quarter earnings were about in line, while sales lagged estimates. AstraZeneca (AZN) reported strong third quarter results and raised its full year guidance.

On the economic front, German factory orders unexpectedly declined in September due to a notable drop in demand from the euro area, according to data released by the German Federal Statistical Office. Factory orders fell 1.7 percent month-on-month in September, confounding expectations for a 1 percent rise. This was the third consecutive decrease in orders.

Data released by Lloyds Banking Group's Halifax division showed that U.K. house prices rose 1.1 percent year-over-year in October, reversing the 0.9 percent drop in September. Economists expected a mere 0.6 percent increase.

A report released by the SMMT showed new care registrations in the U.K. fell for the first time in 43 months in October. New car registrations were down 1.1 percent in a sign the market has stabilized.

U.S. Economic Reports

The Labor Department reported that jobless claims for the week ended October 31st rose to 276,000 from an unrevised 260,000 in the previous week. Economists expected claims to have increased to 262,000 from 260,000 in the previous week.

Meanwhile, the four-week average rose to 262,750 from 259,250. Continuing claims calculated with a week's lag also rose to 2.163 million in the week ended October 24th from 2.146 million in the week ended October 17th. The Labor Department noted that there were no special factors impacting this week's claims.

The Labor Department released its preliminary third quarter productivity and costs report, which showed a 1.6 percent sequential increase in non-farm productivity. The consensus estimate had called for a 0.1 percent sequential increase in non-farm productivity.

Unit labor costs rose 1.4 percent, less than the 2.2 percent increase estimated by economists. The rise in unit cost reflected a 3 percent increase in hourly compensation and a 1.6 percent increase in productivity.

Philadelphia Fed President Patrick Harker is due to deliver welcoming remarks in Philadelphia at 8:30 am ET. Also at 8:30 am ET, New York Fed President William Dudley will give opening remarks at the New York Fed conference on reforming the culture of the financial services industry.

Fed Vice Chair Stanley Fischer and IMF Managing Director Christine Lagarde are due to participate in a discussion at the New York Fed conference at 9:10 am ET.

Chicago Fed President Charles Evans will deliver the opening remarks at the Chicago Fed's international banking conference in Chicago at 10:40 am ET. Fed Governor Daniel Tarullo is scheduled to speak at the Chicago Fed conference at 12:45 pm ET.

At 1:30 pm ET, Atlanta Fed President Dennis Lockhart is due to speak at a joint central bank conference.

Stocks in Focus

Facebook (FB) reported third quarter adjusted earnings and revenues that exceeded estimates. Daily active users rose 17 percent to 1.01 billion on average in September.

Qualcomm (QCOM) reported better than expected fourth quarter results but issued below-consensus guidance for the first quarter.

Expedia (EXPE) announced a deal to buy vacation rental firm HomeAway (AWAY) for $3.9 billion in cash and stock.

Whole Foods (WFM) reported fourth quarter earnings that fell sharply from a year earlier, while its revenues were about in line. The company also announced a new $1 billion stock buyback program and a new capital structure plan.

Prudential (PRU) reported third quarter operating earnings that trailed estimates and its revenues were also shy of estimates.

Computer Sciences (CSC) reported better than expected second quarter results and its full year earnings per share guidance was in line. The company also said its board approved the separation of its U.S. public sector business under the name of CSRA and the declaration of a special cash dividend of $10.50 per CSC share.

MBIA (MBI) reported better than expected third quarter operating earnings. Jack Henry & Associates (JKHY) reported better than expected first quarter results but its revenues were shy of estimates.

Dynegy (DYN) reported below-consensus adjusted earnings for its third quarter but said it remains on track to meet its 2015 adjusted EBITDA and free cash flow guidance.

Costco (COST) reported 1 percent sales growth for November, while total comparable store sales dipped 1 percent despite 1 percent growth in the U.S. Excluding the impact of gasoline price deflation and foreign exchange, comparable store sales rose 5 percent.

Atmos (ATO) announced a 7.7 percent increase in its annual dividend to $1.68 per share.

Allscripts Healthcare (MDRX), bebe Stores (BEBE), Brooks Automation (BRKS), Con Edison (ED), Dreamworks Animation (DWA), EOG Resources (EOG), Hain Celestial (HAIN), J&J Snack Foods (JJSF), Kraft Heinz (KFT), Liberty Global (LBTYA), Monster Beverage (MNST), NVIDIA (NVDA), Skyworks (SWKS), Take-two (TTWO) and Disney (DIS) are among the companies due to report their quarterly results after the close of trading.