Thursday July 26th

26-07-2018

Nasdaq set to drop after Facebook earnings, Dow poised for rise

U.S. stock index futures pointed in different directions ahead of Thursday's open as Wall Street digested Facebook's latest corporate earnings results, while also receiving positive news on trade. Nasdaq 100 futures pointed to a decline of more than 1 percent at the open, pressured by a sharp drop in Facebook shares, while Dow Jones Industrial Average futures indicated a gain of 48.90 points. S&P 500 futures pointed to a loss of 0.3 percent. Facebook shares dropped more than 20 percent in the premarket, a day after its quarterly revenue missed expectations. Global daily active users, a key metric for the social media giant, also disappointed investors. Additionally, Facebook said it expects its revenue growth rates to slow down from last year. Facebook's earnings per share, however, topped Wall Street estimates. The decline in Facebook's stock dragged down the entire tech sector, with shares of Amazon, Apple, Netflix and Alphabet all trading lower before the bell. But while these losses weighed on the tech-heavy Nasdaq, the Dow was poised to outperform after a meeting between President Donald Trump and European Commission President Jean-Claude Juncker. On Wednesday, Trump announced that the U.S. and the European Union had initiated a "new phase" within their relationship, explaining how both regions would start collaborating in order to lower tariffs and avoid a potential trade war. "We agreed today, first of all, to work together towards zero tariffs, zero non-tariff barriers and zero subsidies for the non-auto industrial goods," Trump said at a press conference with Juncker. The U.S. leader, however, did not comment on whether carmaker tariffs had been dealt with; meaning, automakers will be in focus on Thursday. Trade concerns surrounding China however still remain tense. Trump's announcement comes after trade relations between the U.S. and EU had been strained in recent months. Shares of Caterpillar rose 0.5 percent before the bell, helping lift Dow futures. Caterpillar is a company sensitive to trade tensions given its large exposure to overseas revenue. Initial jobless claims climbed by 9,000 to 217,000 in the week ended July 21, one week after hitting a 48-year low. The gain in claims exceeded the 215,000 estimate of economists. Claims are at their highest level since June. The more stable monthly average of claims, meanwhile, fell by 2,750 to 218,000, the government said Thursday. The number of people already collecting unemployment benefits, known as continuing claims, fell by 8,000 to 1.75 million. The Kansas City Fed's manufacturing survey will be out at 11 a.m. ET. Asian stocks closed mixed on Thursday, with losses in the Chinese markets deepening by the day's finish. Greater China markets dropped in the afternoon, with the Shanghai Composite declining 0.71 percent to finish at 2,882.93, and the smaller Shenzhen Composite dropping 0.92 percent to 1,609.72. By 3:11 p.m., the Hang Seng Index had lost 0.61 percent, with the tech and financials sectors leading declines. Japan's Nikkei 225 closed lower by 0.12 percent at 22,586.87. In South Korea, the benchmark Kospi climbed 0.71 percent to close at 2,289.06, with the manufacturing, tech and oil sectors primarily contributing to the advance. Brent crude prices rose on Thursday after Saudi Arabia suspended its oil shipments through a key Red Sea strait in response to an attack on two of its tankers and as data showed U.S. inventories fell to a 3½ year low. Brent crude futures rose 28 cents to $74.21 a barrel by 8:19 a.m. ET (1419 GMT), extending their rally into a third day. U.S. West Texas Intermediate crude futures were 3 cents lower at $69.27 barrel after two days of gains. Gold edged lower on Thursday in response to an easing of trade tensions after the United States agreed to refrain from imposing tariffs on cars from the European Union. The two sides will also begin talks to cut other trade barriers, they announced on Wednesday following a meeting at the White House. Gold usually loses ground to riskier assets such as stocks when global financial and political worries fade. Spot gold slipped 0.2 percent to $1,228.33 per ounce the session, the metal hit $1,235.16, its highest in more than a week. U.S. gold futures for August delivery were 0.3 percent lower at $1,228.10 an ounce.