Market Optimism Rises on Strong Earnings and Fed Policy Hopes
Earnings Season Boosts Sentiment
US stock futures surged on Thursday, driven by a fresh wave of strong earnings releases and renewed hopes of Federal Reserve policy easing. The Nasdaq 100 and S&P 500 futures rose 0.4% and 0.2%, respectively, setting the stage for Wall Street to extend its gains from the previous session.
Bank of America Leads the Charge
Bank of America Corp.’s estimate-beating results lifted its shares in premarket trading, while technology companies such as Nvidia Corp. and Super Micro Computer Inc. rallied after Taiwan Semiconductor Manufacturing Co.’s strong outlook reinforced hopes of resilient spending on artificial intelligence.
Luxury Goods Shine in Europe
European shares also rose, buoyed by luxury goods maker Richemont’s report of a jump in jewelry sales. The results drove an index of European luxury stocks higher by the most since March 2022.
Economic Data Takes Center Stage
The market’s next test will come later Thursday with the release of US initial jobless claims and retail sales figures. Economists forecast retail sales to have slowed slightly last month, providing a broader picture of the economy’s health.
A “Goldilocks” Scenario
Portfolio managers are hoping for a “Goldilocks” scenario, where the economy is in good shape but not hot enough to derail interest-rate bets. “What we want to see is decent growth in the US but no strong re-acceleration,” said Amelie Derambure, a portfolio manager at Amundi Asset Management.
Treasury Yields Steady, Dollar Index Edges Higher
Ten-year Treasury yields held steady on Thursday after Wednesday’s 10 basis-point slide, as traders returned to fully pricing a Fed rate reduction by July. The Bloomberg dollar index edged higher, halting a two-day losing streak.
Currency Markets and Key Events
The pound fell against the greenback after lackluster growth data from Britain underscored the divergence between the US economy and its peers in the developed world. Key events this week include the ECB’s release of its December policy meeting account, Morgan Stanley earnings, and China’s GDP and retail sales data.
Market Moves
Stocks: S&P 500 futures rose 0.2%, Nasdaq 100 futures rose 0.4%, and the Stoxx Europe 600 rose 0.7%. Currencies: The Bloomberg Dollar Spot Index rose 0.1%, the euro was little changed, and the British pound fell 0.3%. Cryptocurrencies: Bitcoin fell 0.8%, and Ether fell 2.6%. Bonds: The yield on 10-year Treasuries advanced one basis point to 4.66%. Commodities: West Texas Intermediate crude fell 1.1%, and spot gold rose 0.4%.
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