US Stocks Open Lower as Traders React to Earnings News

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Thursday, with stocks likely to move back to the downside following the strength seen in the previous session.

The downward momentum for the markets comes as traders react to the latest batch of earnings news from several big-name companies.

Shares of J.C. Penney (JCP) are moving sharply lower in pre-market trading after the department store chain reported a narrower than expected first quarter adjusted loss but cut its full-year earnings guidance.

Network equipment maker Cisco Systems (CSCO) may also come under pressure after reporting better than expected fiscal third quarter earnings but providing a disappointing forecast.

On the other hand, shares of Wal-Mart (WMT) are likely to move to the upside after the retail giant reported first quarter results that exceeded analyst estimates on both the top and bottom lines.

Stocks fluctuated over the course of the trading session on Wednesday but largely maintained a positive bias before closing mostly higher. The upward move on the day came on the heels of the sharp pullback seen in the previous session.

The major averages closed in positive territory but well off their highs of the session. The Dow rose 62.52 points or 0.3 percent to 24,768.93, the Nasdaq advanced 46.67 points or 0.6 percent to 7,398.30 and the S&P 500 climbed 11.01 points or 0.4 percent to 2,722.46.

The strength on Wall Street partly reflected a positive reaction to earnings news from Macy’s (M), with the department store operator surging up by 10.8 percent.

Macy’s jumped to its best closing level in over a year after reporting better than expected first quarter results and providing upbeat guidance.

Buying interest was somewhat subdued, however, with geopolitical uncertainty keeping some traders on the sidelines after North Korea threatened to cancel an historic meeting between leader Kim Jong Un and President Donald Trump.

In a statement published by the state-run Korean Central News Agency, North Korean First Vice Minister of Foreign Affairs Kim Kye Gwan suggested that Trump must accept the reclusive communist country as a nuclear power.

“If the U.S. is trying to drive us into a corner to force our unilateral nuclear abandonment, we will no longer be interested in such dialogue and cannot but reconsider our proceeding to the DPRK-U.S. summit,” Kim said.

Kim pointed to “unbridled remarks” by U.S. officials such as National Security Adviser John Bolton calling on North Korea to abandon nuclear weapons first and be compensated afterward.

The statement from Kim came after North Korea canceled high-level talks with South Korea planned for Wednesday over U.S.-South Korean military drills.

Despite the threats, White House Press Secretary Sarah Sanders said the administrations remains hopeful the meeting will take place.

On the U.S. economic front, the Commerce Department released a report showing a sharp pullback in new residential construction in the month of April.

The report said housing starts plunged by 3.7 percent to an annual rate of 1.287 million in April after jumping by 3.6 percent to an upwardly revised 1.336 million in March.

Economists had expected housing starts to drop to an annual rate of 1.310 million from the 1.319 million originally reported for the previous month.

The Commerce Department said building permits also tumbled by 1.8 percent to an annual rate of 1.352 million in April after surging up by 4.1 percent to an upwardly revised 1.377 million in March.

Building permits, an indicator of future housing demand, had been expected to edge down to 1.350 million from the 1.354 million originally reported for the previous month.

A separate report from the Federal Reserve showed industrial production increased by slightly more than anticipated in the month of April.

The Fed said industrial production climbed by 0.7 percent in April, matching the upwardly revised increase in March. Economists had expected industrial production to rise by 0.6 percent.

Steel stocks turned in some of the market’s best performances, resulting in a 2.1 percent jump by the NYSE Arca Steel Index. With the gain, the index reached its best closing level in well over two months.

Considerable strength also emerged among computer hardware stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Computer Hardware Index. The advance lifted the index to a record closing high.

Hard drive and memory chip maker Western Digital (WDC) lead the hardware sector higher, surging up by 4.9 percent on the day.

Semiconductor stocks also showed a significant move to the upside, driving the Philadelphia Semiconductor Index up by 1.4 percent.

Micron Technology (MU) posted a standout gain after RBC Capital initiated coverage of the chipmaker’s stock with an Outperform rating.

Tobacco, oil service, and natural gas stocks also saw notable strength on the day, while weakness was visible among utilities stocks.