Stock futures falter as company earnings rise

U.S. stock futures pointed to another choppy session on Thursday as third-quarter corporate financial results continued to climb amid lingering growth concerns on Wall Street.

Futures contracts linked to the S&P 500 (^GSPC) rose 0.1%, while futures on the Dow Jones Industrial Average (^ DJI) added 110 points, or 0.4%. Contracts on the technology-intensive Nasdaq Composite (^IXIC) slipped 0.1% below the flatline. Meanwhile, Treasury yields held at multi-year highs, with the rate-sensitive 2-year note rising above 4.6% for the first time since 2007.

The United Kingdom again caught the attention of American investors on Thursday morning with the Prime Minister Liz Truss resigns after his administration presented a failed economic package including plans for tax cuts that rattled financial markets. The pound strengthened and UK bonds rose after news that Truss will step down by the end of next week.

Back in the US, the Labor Department reported an unexpected drop in the number of Americans filing for unemployment insurance for the week ended Oct. 15 to 214,000 from a revised 226,000 last week, a sign that the labor market remains tight despite efforts to rein in the economy to curb inflation. Economists polled by Bloomberg forecast a total of 230,000 claims.

“The drop in initial jobless claims confirms our view that the increases over the past two weeks were noise rather than a signal, triggered by seasonal adjustment issues, but the one-week data does not prove nothing, and we need to see similar readings over the next few weeks in order to be sure the trend is still below 220,000,” Pantheon Macroeconomics chief economist Ian Shepherdson said in a note. “Also note that low claims numbers are no guarantee of strong payrolls; when demand first weakens, companies reduce gross new hires before they start laying off existing staff.”

On the business side, AT&T Inc. (J) and American Airlines (AAL) were the latest names to report better-than-expected third-quarter results from analysts.

Telecommunications giant AT&T on Thursday released numbers that beat sales and profit forecasts and raised its profit forecast, also revealing 964,000 new subscribers and affirming confidence to deliver previously estimated cash flow for the rest of the year. ‘year. The shares gained 2.5% in early trades.

And American Airlines Group said Thursday that travel demand remains robust despite higher airfares as it raised its profit forecast for the current quarter. The stock jumped 3% ahead of the open, further boosting what has been a solid week for airline stocks as financials show the industry has rebounded from the pandemic.

An American Airlines Boeing 737-800, fitted with radar altimeters that may conflict with 5G telecommunications technology, can be seen flying 500 feet above the ground on final approach to land at the airport New York’s LaGuardia, New York, U.S., January 6, 2022. REUTERS/Bryan Woolston

Tesla Stock (TSLA) fell around 6% in early trading after the electric vehicle maker released Tuesday night results that disappointed Wall Streetbeating on the earnings per share estimate but below quarterly revenue expectations.

The company reiterated its previous forecast of a 50% CAGR in vehicle deliveries for the year, although it admitted headwinds from rising raw material costs and inefficiencies in its Gigafactory Berlin.

“I can’t stress enough that we have excellent demand for the fourth quarter and we plan to sell every car we make as far as we can see,” Chief Executive Elon Musk said, adding: “The “North America is in pretty good shape, even if the Fed raises interest rates more than it should, but I think they will eventually realize that and lower them again.

German Chancellor Olaf Scholz, Prime Minister of Brandenburg Dietmar Woidke and Elon Musk attend the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany March 22, 2022. Patrick Pleul/Pool via REUTERS

German Chancellor Olaf Scholz, Prime Minister of Brandenburg Dietmar Woidke and Elon Musk attend the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany March 22, 2022. Patrick Pleul/Pool via REUTERS

James Bullard, President of the Federal Reserve Bank of St. Louis said in a Bloomberg TV interview on Wednesday that he expects policymakers to end the “frontloading” of sharp interest rate hikes by early next year and make smaller moves as needed until that inflation goes down.

The Fed Beige Book, a publication of economic assessments across the 12 U.S. central bank districts, showed firms remained largely resilient amid the macro phase of higher rates and policy tightening thanks to strong pricing power. . But some have expressed difficulty with consumer pushback in the face of rising prices and inflation that has continued to drive up wages.

Corporate earnings have so far reflected resilience, but Wall Street strategists have widely warned earnings-per-share forecasts will continue to slide.

“We are becoming skeptical this quarter will bring enough corporate earnings capitulation to next year’s numbers for the final lows of this bear market to occur now,” said Morgan Stanley chief equity strategist Mike Wilson. . said earlier this week in a podcast. “Final lows for this bear are likely to be closer to 3000-3200 as companies capitulate and guide 2023 guidance lower during the Q4 earnings season in January and February.”

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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