Brexit Deal Triggers Early Buying Interest on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a pointing to a higher opening on Thursday, with stocks likely to move back to the upside after ending the previous session modestly lower.

Early buying interest may be generated in reaction to news that the U.K. and EU negotiators have reached a last-minute Brexit deal.

European Commission President Jean-Claude Juncker described the deal as ?fair and balanced? for the EU and the U.K. and urged member nations to back the agreement.

The deal could eliminate some of the Brexit uncertainty hanging over the global markets, although it remains to be seen if the agreement will be approved by U.K. lawmakers.

A positive reaction to the latest batch of earnings news may also contribute to some early strength on Wall Street.

Following the rally seen on Tuesday, stocks showed a lack of direction over the course of the trading day on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages finished the day modestly lower. The Dow edged down 22.82 points or 0.1 percent to 27,001.98, the Nasdaq dipped 24.52 points or 0.3 percent to 8,124.18 and the S&P 500 slipped 5.99 points or 0.2 percent to 2,989.69.

The choppy trading on Wall Street came as traders digested mixed U.S. economic data as well as the latest batch of earnings news.

Before the start of trading, the Commerce Department released a report showing an unexpected decrease in U.S. retail sales in the month of September.

The Commerce Department said retail sales fell by 0.3 percent in September after climbing by an upwardly revised 0.6 percent in August.

The drop came as a surprise to economists, who had expected sales to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Excluding a notable pullback in auto sales, retail sales still edged down by 0.1 percent in September after rising by a revised 0.2 percent in August.

Economists had expected ex-auto sales to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

The drop in retail sales raised some concerns about the economic outlook but also added to optimism about further interest rate cuts by the Federal Reserve.

Meanwhile, the National Association of Home Builders released a separate report showing homebuilder confidence unexpectedly climbed to its highest level in well over a year in the month of October.

The report said the NAHB/Wells Fargo Housing Market Index jumped to 71 in October after inching up to 68 in September. Economists had expected the index to come in unchanged from the previous month.

With the unexpected increase, the housing market index rose for the fourth straight month and reached its highest level since hitting a matching reading in February of 2018.

Later in the day, the Federal Reserve released its Beige Book, which said the U.S. economy expanded at only a slight to modest pace over the past month.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, noted business activity varied across the country.

Traders were also reacting to the latest batch of earnings news, with Bank of America (BAC) moving notably higher after reporting better than expected third quarter results.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster performance by the broader markets.

Steel stocks showed a significant move to the downside, however, with the NYSE Arca Steel Index slumping by 2 percent amid renewed uncertainty about a U.S.-China trade deal.

Software and semiconductor stocks also saw considerable weakness, dragging the Dow Jones U.S. Software Index and the Philadelphia Semiconductor Index down by 1.7 percent and 1.5 percent, respectively.

On the other hand, gold stocks moved sharply higher over the course of the session, resulting in a 1.8 percent jump by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a notable increase by the price of the precious metal.