U.S. stock index futures were higher on Thursday as stable bond yields continued to give the green light to investors to buy stocks following Monday’s market rout.
Futures contracts tied to the Dow Jones Industrial Average gained 33 points, or 0.1%, pointing to a third day of gains for the blue-chip average following Monday’s pullback. S&P 500 futures rose 0.1% and Nasdaq 100 futures added 0.2%.
The Dow is now up 0.3% on the week and sits less than 1% from a record high. The 10-year Treasury yield was slightly higher on Thursday to 1.29%, up from a drop to 1.17% earlier in the week that spooked stocks.
Names closely linked to the economic reopening were higher in premarket trading. Royal Caribbean was up 1%. Energy stocks were higher as oil rebounded back above $70 a barrel. Bank shares were higher with yields stable in early trading.
A strong second-quarter earnings reporting season continued. AT&T shares gained 1% after earnings and revenue topped analyst estimates. CSX jumped 2% after the railroad’s second-quarter profit more than doubled.
However, Texas Instruments was set to weigh on tech shares, down more than 4% in early trading. The chipmaker topped expectations for the second quarter, but warned that third quarter results could fall short of analysts’ estimates.
On Wednesday, the Dow gained 286 points, or 0.83%, while the S&P climbed 0.82%. The Nasdaq Composite was the relative outperformer, rising 0.92%. Energy was the top-performing S&P group, advancing 3.5% as oil prices rebounded.
Wednesday’s gains built on Tuesday’s strong session, and the major averages have now erased the losses from Monday’s sell-off. The Dow dropped more than 700 points to start the week as rising Covid cases worldwide hit sentiment. The yield on the 10-year Treasury dipped to a five-month low at the beginning of the week, which also caused investors to offload equities. On Wednesday the yield on the 10-year rose 8 basis points to 1.29%.
“The truth is investors have been very spoiled by the recent stock market performance,” noted LPL Financial chief market strategist Ryan Detrick. “Incredibly, we haven’t seen as much as a 5% pullback since October. Although we firmly think this bull market is alive and well, let’s not fool ourselves into thinking trees grow forever. Risk is no doubt increasing as we head into the troublesome August and September months.”
A busy week of earnings will continue on Thursday. D.R. Horton, Southwest Air, American Airlines, Abbott Labs and Union Pacific are among the names on deck before the opening bell. Intel, Twitter, Snap and Capital One will post quarterly updates after the market closes.
So far 15% of the S&P 500 has reported earnings, with 88% beating earnings estimates, according to Refinitiv. Of the companies that have reported, 84% have topped revenue expectations.
Investors will also be watching the weekly jobless claims number from the Department of Labor on Thursday. Economists polled by Dow Jones are expecting the number of first-time filings to be 350,000, down from the prior reading of 360,000. Existing home sales figures will also be released.
“We expect a continuation of sloppy trading through the seasonally-weak summer months; however, our base case remains that the primary trend over the next 12 months remains higher,” Keith Lerner, chief market strategist at Truist wrote in a note to clients. “The S&P 500, which just made a new record high last week, has gone one of the longest periods of the past decade without so much as a 5% pullback,” he added.
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