FX.co ★ Futures Pointing To Sharply Lower Open On Wall Street

U.S. major index futures suggest a sharp drop in the opening of the stock market this Thursday, continuing the lackluster trend observed in the previous session. Meta Platforms, Facebook's parent company, reported first quarter earnings exceeded forecasts but not its Q2 revenue guidance, contributing to a likely 15.5% drop in pre-market trading stocks.

Similarly, IBM Corp struggled after reporting Q1 revenue fell short of expectations. Adding to these developments, IBM announced its acquisition of HashiCorp, valued at $6.4 billion, at a price of $35 per share in cash. Contrarily, Dow components Merck and Honeywell are showing pre-market strength having reported first quarter results exceeding analyst estimates. A recent report from the U.S. Commerce Department also served as a blow to the futures market, revealing the U.S. economic growth to be slower than expected in Q1 2024.

The Gross Domestic Product (GDP) increased by 1.6% in the first quarter, a noticeable slowdown compared to the 3.4% surge in Q4 2023. The expected GDP jump was 2.5%. The significant deceleration in the GDP growth rate was largely driven by a slowdown in consumer spending, exports, state and local government expenditure, and a decrease in federal government spending.

Throughout Wednesday's trading session, stocks exhibited a mediocre performance following the week's strong kickoff. The major averages fluctuated throughout the day around the unchanged line before closing narrowly mixed. The Dow dropped slightly, the S&P 500 rose less than a tenth of a percent, while the Nasdaq marginally ascended.

The boost in Wall Street stocks, following last week's considerable weakness, was initially attributed to positive reactions to the latest corporate earnings reports. Despite reporting weaker than expected Q1 results, shares of Tesla spiked by 12.1% after CEO Elon Musk announced plans to start production of a new affordable model by early 2025. Also, Texas Instruments showed significant strength after topping Q1 expectations.

Meanwhile, Visa and Mattel shares rose, having reported better than anticipated quarterly results. Despite the initial trades enthusiasm, buying interest quickly faded, with traders expressing concerns over the interest rates outlook ahead of the upcoming Federal Reserve meeting. Though no changes are expected to the interest rates, traders are eager for potential clues about future rate cuts.

As the week progresses, the Commerce Department is set to release a report on personal income and spending, including inflation readings that the Federal Reserve favors. Additionally, traders appear hesitant to make significant moves before upcoming big tech earnings report announcements.

On another note, a recent report from the Commerce Department revealed that the new orders for U.S. manufactured durable goods surged unexpectedly in March. Substantial movements were also observed in the transportation sector, contributing to a 2.3% decline in the Dow Jones Transportation Average. Significant losses were also witnessed in the housing, pharmaceutical, and retail sectors, while semiconductor stocks performed strongly, following Texas Instruments' upbeat results.

Crude oil futures have risen to $83.26 a barrel, a $0.45 increase, after experiencing a $0.55 decrease to $82.81 a barrel. Gold futures, on the other hand, are slightly descending, with a $1 decline to $2,337.40 an ounce, following a $3.70 drop to $2,338.40 in the previous session.

In currency exchange, the U.S. dollar is currently valued at 155.63 yen, a slight increase compared to its 155.35 yen value at the close of New York trading on Wednesday. Against the euro, the dollar is worth $1.0695, a small decrease from yesterday's $1.0699.

Asian stocks witnessed a dip in holiday trading on Thursday, with both the Australian and New Zealand markets closed for Anzac Day. Investors seemed cautious as Meta Platforms, Facebook's parent company, noted that their expenses would likely increase this year due to substantial investments in artificial intelligence (AI). Investors are also awaiting the release of the U.S. GDP data for Q1 and earnings reports from major companies such as Intel, Microsoft, and Alphabet.

Despite the overall decline, Chinese stocks experienced a minor increase, with the Shanghai Composite Index rising by 0.3% to 3,052.90. The Hang Seng Index in Hong Kong also grew by 0.5% to 17,284.54, attributing the growth to global funds increasing their allocation in China based on economic recovery expectations.

In contrast, Japanese markets experienced a significant drop as the yen fell beyond 155 per dollar for the first time in over three decades, prompting speculations about possible Bank of Japan intervention. The Nikkei 225 Index plummeted 2.2% to 37,628.48, as top Tech stocks and exporters lost ground.

South Korean stocks also dipped, with the Kospi average down 1.8% ending at 2,628.62, despite SK Hynix, an Nvidia supplier, returning to profit in the first quarter.

European stocks offered a mixed performance with the U.K. stocks outpacing Germany's DAX Index and France's CAC 40 Index due to strong earnings reports and a takeover proposal for Anglo American by mining giant BHP Group.

There were strong performances from Delivery Hero after it reported robust first-quarter results and lifted its full-year revenue outlook, and from Barclays which reported a smaller-than-expected drop in profit for the first quarter. Unilever also performed well, beating first-quarter sales estimates and maintaining its full-year guidance.

Despite positive profit growth in the first quarter, shares of Deutsche Bank fell. The stocks of French spirits maker Pernod Ricard and software maker Dassault Systemes experienced a drop as well, with the former reporting underwhelming fiscal third quarter sales, and the latter despite solid Q1 results.

Consumer confidence in Germany is expected to rise again in May, according to a survey conducted by the market research group GfK and the Nuremberg Institute for Market Decisions.In April, the confidence in French manufacturing declined considerably, mainly owing to deteriorating order books. This was revealed in a monthly survey conducted by the statistical office INSEE. The drop was more than expected, with the manufacturing confidence index decreasing to 100 in April, down from a revised 103 in March. Analysts had predicted a score of 102.

As for the U.S. economic reports, a surprising decline was reported in the first-time claims for U.S. unemployment benefits for the week ending April 20th. The Labour Department stated that initial jobless claims went down to 207,000, a 5,000 decrease from the preceding week's level of 212,000. This announcement surprised economists who had anticipated a slight increase in jobless claims to 214,000. The Department also noted a slight decline in the less volatile four-week moving average to 213,250 from the earlier week's unrevised average of 214,500.

In another development, the Commerce Department mentioned that the U.S. economy's growth in the first quarter of 2024 was significantly less than what was expected. The gross domestic product (GDP) saw a growth of 1.6 percent, following a 3.4 percent surge in the fourth quarter of 2023. Economists had forecasted a GDP jump of 2.5 percent. This notable slowdown was mainly due to a decrease in consumer spending, exports, state and local government spending, and a downturn in federal government spending.

The National Association of Realtors is set to release its report on pending home sales for March at 10 am ET. A rise of 0.3 percent is expected after a 1.6 percent increase in February. Furthermore, the results of the Treasury Department's auction of $44 billion worth of seven-year notes will be announced at 1 pm ET.

There are several stocks in focus. Shares of American Airlines saw a sharp rise in pre-market trading after reporting higher than expected losses for the fiscal quarter. However, its earnings guidance for the current quarter is optimistic. Chipotle Mexican Grill, a restaurant chain, is also expected to show initial strength after posting first-quarter results that exceeded expectations.

On the flip side, Southwest Airlines' shares are experiencing a plunge in pre-market trading following disappointing first quarter results and a warning about the impact of Boeing's airplane delays. Construction equipment manufacturer Caterpillar might also face pressure after announcing first-quarter earnings better than estimated, but revenues were weaker than expected.