Business Post Contributor
The major US index futures are currently pointing to a higher open on Thursday, with stocks likely to move back to the upside following the sharp pullback seen in the previous session.
A positive reaction to the latest batch of corporate earnings news may contribute to an initial rebound on Wall Street.
Shares of Disney (DIS) are surging 5.7 per cent in pre-market trading after the entertainment giant reported better-than-expected fiscal first-quarter results.
Disney CEO Bob Iger also announced the company would be cutting 7,000 jobs as part of a broader cost-cutting and restructuring plan.
Snack and beverage giant PepsiCo (PEP) may also see initial strength after reporting fourth-quarter results that exceeded analyst estimates, raising its annualized dividend by 10 per cent and announcing a $1.0 billion stock buyback.
Meanwhile, shares of Mattel (MAT) may come under pressure after the toymaker reported fourth-quarter results that missed analyst estimates on both the top and bottom lines.
Stocks moved sharply lower during trading on Wednesday, giving back ground following the rally seen in Tuesday’s session. The major averages all moved to the downside on the day, with the tech-heavy Nasdaq leading the pullback.
The major averages finished the session near their worst levels of the day. The Nasdaq tumbled 203.27 points or 1.7 per cent to 11,910.52, the S&P 500 slumped 46.14 points or 1.1 per cent to 4,117.86, and the Dow slid 207.68 points or 0.6 per cent to 33,939.01.
The pullback on Wall Street came as some traders looked to cash in Tuesday’s gains, which came amid a positive reaction to comments by Federal Reserve Chair Jerome Powell.
Powell acknowledged recent indications of easing inflation but noted that the disinflationary process has a long way to go and cautioned further interest rate hikes could be needed.
The positive sentiment generated in reaction to Powell’s comments was partly offset by remarks by New York Fed President John Williams, who said interest rates might need to be kept at an elevated level for a “few years” to bring down inflation.
“To me, the important thing is we need a sufficiently restrictive stance, we need to retain a sufficiently restrictive stance of policy, we’re going to need to maintain that for a few years to make sure we get inflation to 2 per cent, then eventually we’ll get interest rates presumably back to more normal levels,” Williams said at The Wall Street Journal’s CFO Network Summit in New York.
The comments from Powell and Williams come after the Fed raised interest rates by 25 basis points last and signalled further rate hikes in the future.
“Williams quickly sank risk appetite after he reminded Wall Street that if financial conditions loosen, higher rates may be needed,” said Edward Moya, senior market analyst at OANDA.
He added, “Financial conditions have been easing since October and this is why the Fed needed to push back on how the markets have been pricing in rate cuts at the end of the year.”
Overall trading activity was somewhat subdued, however, with a relatively light economic calendar keeping some traders on the sidelines.
