Stock Futures are Pointing a Little Lower as Major Indices Test All-time Highs

Stock Futures are Pointing a Little Lower as Major Indices Test All-time Highs

5 min read (Thursday Market Open) Stock futures are slightly lower as another large group of companies report earnings on Thursday. Starting with a surprise from AT&T (T), the company is trading higher in premarket trading after beating on earnings despite missing on revenue. AT&T saw growth over the last quarter with strength in HBO, wireless subscriptions, and postpaid and prepaid phones.

Unilever (UL) demonstrated pricing power by raising prices on its products by 4.1% in the third quarter and delivered better-than-expected revenues. The ability for a company to pass on its higher costs to consumers can be difficult, but Unilever was able to do it. However, the company warned that it expects to see higher inflation next year. Whether or not the company can continue to pass on these costs is unknown.

Copper miner Freeport-McMoRan (FCX) is trading 1.82% lower after reporting disappointing revenues despite beating on earnings estimates. The company has benefited from a nearly 50% increase in copper prices.

On Wednesday, Bloomberg reported that PayPal (PYPL) is in talks to acquire social media company Pinterest (PINS). PayPal’s stock price fell nearly 5% on the news. However, Pinterest rose 12.77% after being briefly halted due the quick rally. On Thursday, PayPal will report its third quarter earnings

After the close, more earnings announcement will come in for companies like Intel (INTC), Chipotle (CMG), and Whirlpool (WHR). These companies could provide additional insights as to how various parts of the economy are handling supply chain issues. Additionally, Whirlpool is seen by some investors as insight into the housing market.

After Wednesday’s close, automaker and technology company Tesla (TSLA) reported better-than-expected earnings, but the news didn’t really seem to surprise investors. Earlier this month, the company had already reported that it had made record deliveries in the third quarter. Tesla also reiterated its previous forward guidance to achieve 50% average annual growth in vehicle deliveries over the next few years. Tesla is trading lower before the open despite analysts raising price targets across the board.

Some may say, Big Blue ain’t what she used to be, IBM (IBM) gave a negative surprise to investors by missing its earnings and revenue estimates. The company’s managed infrastructure business struggled because of declining orders. The infrastructure business is slated to be part of a spinoff next month. The company also saw losses in its cloud business. The stock was down more than 4.6% in after-hours trading.

Overall, the markets did rise on Wednesday, and the Dow Jones Industrial Average ($DJI) and S&P 500 (SPX) tested their all-time highs as large- and mega-cap companies continue to garner attention from investors. Travelers (TRV), Amgen (AMGN), and Coca-Cola (KO) helped drive the Dow Jones higher. So far, 81 companies of the S&P 500 have reported earnings and 80 of them have beat. The more capitalization-diverse Nasdaq Composite (COMP: GIDS) remained relatively flat. Oil futures (/CL) are also testing old highs, the October contract expired last night at a 14-year high. Economic Survey

Outside earnings news, some important economic data is coming through. Initial jobless claims came in better than expected with fewer people filing claims last week. However, the Philadelphia Fed Manufacturing Index missed analysts’ expectations and is reading about half of its March high. The September existing home sales will report after the open. These reports offer insights into various parts of the economy. A broader economic picture was given in a report on Wednesday.

The Summary of Commentary on Current Economic Conditions, better known as the Beige Book, was released by the U.S. Federal Reserve. This report is published eight times a year and provides anecdotal information on current economic conditions in each of the Fed’s 12 districts.

The Beige Book report doesn’t usually move the markets, but it and the FOMC Meeting Minutes are helpful when it comes to understanding what Fed members are seeing in relation to the economy, inflation, and interest rates.

The October Beige Book reported moderate economic growth. Employment also grew at a modest pace despite high demand for labor. According to the report, labor shortages are being caused by child-care issues and vaccine mandates. However, many workers also left for other jobs or chose to retire.

While most districts remain positive about their respective economic futures, concerns around labor, inflation, and supply chain bottlenecks are reducing optimism. Most districts reported significantly higher prices for goods and raw materials and problems in getting supplies and products through supply chain bottlenecks.

While there isn’t much new in the report for people who consistently follow the financial news, it does show […]

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