US stocks could see early strength on upbeat economic news

(RTTNews) – Following the pullback seen at the end of the previous session, stocks are expected to rally higher in early trading on Thursday. Major index futures are currently pointing to a higher open for markets, with the Dow Jones futures contract up 68 points.

Early buying interest could be generated in reaction to a Commerce Department report showing stronger-than-expected U.S. economic growth in the fourth quarter of 2021.

The report said real gross domestic product jumped 6.9% in the fourth quarter after jumping 2.3% in the third quarter. Economists had expected GDP to rise by 5.5%.

The Commerce Department said the stronger-than-expected GDP growth reflected an increase in private investment in inventory, exports, consumer spending and non-residential fixed investment.

The data may offset fears that the Omicron variant of the coronavirus has derailed the economy even as the Federal Reserve prepares to start raising interest rates to fight inflation.

Adding to the positive sentiment, the Department of Labor released a report showing that initial jobless claims fell in the week ended Jan. 22 after a bigger-than-expected increase the previous week.

The report said initial jobless claims fell to 260,000, down 30,000 from the previous week’s revised level of 290,000.

Economists had expected jobless claims to fall to 260,000 from 286,000 initially reported the previous week.

However, the bullish momentum on Wall Street could be partially offset by a negative earnings reaction from major corporations like Intel (INTC), Tesla (TSLA) and McDonald’s (MCD).

The Commerce Department also released a separate report showing that new orders for durable goods fell more than expected in December amid a sharp drop in orders for transportation equipment.

The report said durable goods orders fell 0.9% in December after surging an upwardly revised 3.2% in November.

Economists had expected durable goods orders to fall 0.5% from the 2.6% peak reported the previous month.

Excluding the sharp drop in transportation equipment orders, durable goods orders rose 0.4% in December after jumping 1.1% in November. Non-transport orders are expected to rise 0.5%.

Shortly after trading begins, the National Association of Realtors is expected to release its December pending home sales report. Pending home sales are expected to fall 0.2%.

A pending home sale is one in which a contract has been signed but not yet completed. Normally, it takes four to six weeks to close a contract sale.

Stocks were mostly higher for much of Wednesday’s trading session, but came under pressure in reaction to the highly anticipated monetary policy announcement from the Federal Reserve. The major averages all moved lower, although the Nasdaq managed to climb back above the unchanged line.

After jumping 3.4%, the tech-heavy Nasdaq fell well off its best levels but still rose 2.82 points or less than a tenth of a percent to 13,542.12. Meanwhile, the Dow Jones fell 129.64 points or 0.4% to 34,168.09 and the S&P 500 fell 6.52 points or 0.2% to 4,349.93.

In overseas trading, stock markets in the Asia-Pacific region fell sharply in Thursday’s trading. Japan’s Nikkei 225 index fell 3.1%, while China’s Shanghai Composite index fell 1.8%.

Meanwhile, major European markets rallied higher after experiencing early weakness. While Britain’s FTSE 100 index is up 0.9%, France’s CAC 40 index is up 0.1% and Germany’s DAX index sits just above the unchanged line.

In commodities trading, crude oil futures climbed $0.69 to $88.04 a barrel after jumping $1.75 to $87.35 a barrel on Wednesday. Meanwhile, after falling from $22.80 to $1,829.70 an ounce in the previous session, gold futures plunge $27.10 to $1,802.60 an ounce. .

On the currency front, the US dollar is trading at 115.37 yen from 114.64 yen at the close of trading in New York on Wednesday. Against the Euro, the Dollar is valued at $1.1145 versus $1.1240 yesterday.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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