US stocks are poised for a modestly higher start on Thursday, with the S&P 500 looking to extend its winning streak to six sessions. The ultimate trading direction for the day could depend heavily on a number of key data releases, all of which pertain to the job market, consumer spending, and manufacturing activity. These will be closely watched, as they offer insights into the current state of the US economy. In addition to these macro data points, a slew of retail earnings reports will be released throughout the day, further adding to the volatility.
Fund manager Louis Navellier highlighted the July retail sales report and Walmart’s earnings as particularly significant for gauging the health of the consumer. These reports are crucial given concerns expressed by various companies on their earnings calls about the potential impact of rising credit card balances and delinquency rates on consumer spending. Notably, Walmart shares surged over 6% in pre-market trading following the release of its quarterly earnings, which beat analyst expectations, and an upward revision to its full-year guidance.
Looking back at Wednesday’s session, Wall Street ended the day on a positive note, although trading sentiment remained muted for much of the day. The market’s focus was on the July consumer price inflation report, which came in line with expectations. Alphabet, Inc. (GOOGL) took a hit, dragging down communication services stocks, amid rumors that the Department of Justice is considering a potential breakup of the search giant due to antitrust concerns.
Despite the initial dip, the Dow Industrials and the S&P 500 Index managed to recover and trade higher for the remainder of the session. The tech-heavy Nasdaq Composite, however, remained in negative territory for the majority of the day, ending with only a slight gain. All three major averages are now at their highest levels in approximately two weeks.
Market strategists remain optimistic, with Eric Freedman, chief investment officer for US Bank Wealth Management, stating that the recent equity market pullback should not deter investors. He believes this presents a good opportunity for investors to allocate capital to longer-term assets. Navellier echoes this sentiment, predicting that the market recovery will continue, as any weakness in economic data could actually increase the likelihood of a more aggressive Fed-cutting cycle.
Several key economic data releases are scheduled for Thursday. The Commerce Department will publish the July retail sales report at 8:30 a.m. EDT, with economists forecasting a 0.3% month-over-month increase in the headline number following stagnant sales in June. Excluding automobiles, retail sales growth might have slowed from 0.4% to 0.1%.
The Labor Department will release the weekly jobless claims report at 8:30 a.m. EDT, with the consensus estimate pointing to 235,000 claims for the week ended August 10, a slight increase from the previous week’s 233,000. The Department will also release the import and export price report for July around the same time.
Later in the morning, the New York Fed and the Philadelphia Fed will publish the results of their respective regional manufacturing surveys for August at 8:30 a.m. EDT. The New York Fed’s business conditions index is expected to remain in contraction territory at -6, compared to -6.6 in July. The Philadelphia Fed’s diffusion index of business activity is projected to come in at 7.9 for August, down from 13.9 in July.
The Federal Reserve is slated to release the industrial production report for July at 9:15 a.m. EDT. Economists anticipate a 0.1% month-over-month dip in output, reversing some of the 0.6% increase witnessed in June.
In addition to economic data, several companies are scheduled to report earnings on Thursday. Cisco Systems, Inc. (CSCO) surged over 6% in pre-market trading following the release of its quarterly results, while Lumentum Holdings Inc. (LITE) soared over 16%, also driven by its strong quarterly earnings. Other notable companies reporting earnings before the market open include Alibaba Group Holding Limited (BABA), JD.com, Inc. (JD), Walmart, and Deere & Company (DE). After the market close, companies like Applied Materials, Inc. (MAT), Coherent Corp. (COHR), and H&R Block, Inc. (HRB) will release their earnings.
Warren Buffett’s Berkshire Hathaway, Inc. (BRK)(BRK-B) stake disclosures led to a jump in shares of Sirius XM Holdings Inc. (SIRI) and Ulta Beauty, Inc. (ULTA), both rising over 13% and 15%, respectively. Nike, Inc. (NKE) also saw a surge of over 4% after Bill Ackman’s Pershing Square initiated a position in the company.
In the commodities market, crude oil and gold futures rebounded after Wednesday’s decline. Gold is currently trading below the $2,500-an-ounce level. The 10-year Treasury note yield rose 1.7 points to 3.839%. Bitcoin (BTC/USD) retreated by over 4% in the past 24 hours, falling back towards the $54,000 level.
Asian markets that remained open for trading closed mostly higher on Thursday, with the Indonesian, Taiwanese, and Hong Kong markets experiencing modest weakness. The South Korean and Indian markets were closed for public holidays. The Japanese market benefitted from a robust growth rebound in the second quarter, while the Chinese market was encouraged by a series of weak data releases that fueled expectations for stimulus. European stocks held up in early trading.
