Stocks May Move Back To The Upside In Early Trading - U.S. Commentary


(RTTNews.com) - Following the pullback seen late in the previous session, stocks are likely to move back to the upside in early trading on Thursday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 74 points.

Early buying interest may be generated in reaction to some upbeat economic data, including a report from the Commerce Department showing a much bigger than expected increase in retail sales in the month of May.

The Commerce Department said retail sales jumped by 0.8 percent in May after climbing by an upwardly revised 0.4 percent in April.

Economists had expected retail sales to rise by 0.4 percent compared to the 0.3 percent increase originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales still surged up by 0.9 percent in May following a 0.4 percent increase in April. Ex-auto sales had been expected to climb by 0.5 percent.

A separate report from the Labor Department unexpectedly showed a modest decrease in initial jobless claims in the week ended June 9th.

The report said initial jobless claims edged down to 218,000, a decrease of 4,000 from the previous week's unrevised level of 222,000. Economists had expected initial jobless claims to inch up to 224,000.

Meanwhile, traders are also digesting the European Central Bank's highly anticipated monetary policy announcement.

Following its monetary policy meeting, the ECB announced plans to begin winding down its massive bond-buying program.

The ECB said it plans to reduce the monthly pace of its net asset purchases to 15 billion from 30 billion after September before completely ending the program at the end of December.

Meanwhile, the ECB left interest rates unchanged and said it expects rates to remain at their present levels at least through the summer of 2019.

"The ECB's announcement that it will end its asset purchases in December is probably a little bolder than markets had expected, but this is tempered by the pledge to keep interest rates on hold for more than a year," said Jennifer McKeown, Chief European Economist at Capital Economics.

Stocks saw modest strength for much of the trading session on Wednesday but came under pressure following the Federal Reserve's monetary policy announcement. The Nasdaq reached a record intraday high but pulled back into negative territory along with the other major averages.

The major averages all closed in the red, although the tech-heavy Nasdaq edged down just 8.10 points or 0.1 percent to 7,695.70. The Dow slid 119.53 points or 0.5 percent to 25,201.20 and the S&P 500 fell 11.22 points or 0.4 percent to 2,775.63.

In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Thursday. Japan's Nikkei 225 Index slumped by 1 percent, while Hong Kong's Hang Seng Index dropped by 0.9 percent.

Meanwhile, the major European markets have moved higher following the ECB announcement. While the French CAC 40 Index has climbed by 0.7 percent, German DAX Index is up by 0.4 percent and the U.K.'s FTSE 100 Index is up by 0.3 percent.

In commodities trading, crude oil futures are climbing $0.45 to $67.09 a barrel after rising $0.28 to $66.64 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,311.50, up $10.20 compared to the previous session's close of $1,301.30. On Wednesday, gold rose $1.90.

On the currency front, the U.S. dollar is trading at 110.16 yen compared to the 110.34 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1714 compared to yesterday's $1.1791.


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