U.S. index futures are indicating a positive opening on Thursday, suggesting stocks will rebound after closing mostly lower in the previous session. This optimism is largely driven by favorable earnings reports from prominent companies such as IBM Corp., Meta Platforms, and Tesla.
IBM's shares are soaring by 9.5% ahead of market opening, following fourth quarter earnings that surpassed analyst forecasts. Meta Platforms, the parent company of Facebook, is also experiencing robust pre-market activity after its reported earnings topped estimates on both revenue and profit lines. Meanwhile, Tesla shares are expected to rise despite its fourth quarter earnings falling short of expectations.
Conversely, Microsoft shares are down by 4.5% in pre-market trading. The software giant delivered better-than-expected fiscal second quarter results but issued lackluster revenue guidance for the coming quarter.
Wednesday's trading saw stocks decline, partially counteracting Tuesday's strong recovery. Despite some recovery from their lowest points, primary indices closed the day negatively. The Nasdaq dropped 101.26 points to 19,632.32, the S&P 500 declined by 28.39 points to 6,039.31, and the Dow decreased by 136.83 points to 44,713.52.
The downward trend on Wall Street followed the Federal Reserve's anticipated decision to maintain interest rates unchanged after its first monetary policy meeting of 2025. The Fed kept the federal funds rate target range at 4.25% to 4.50%, aligning with its commitments to maximum employment and a 2% inflation rate long-term goal.
Notably, the Fed omitted earlier language that suggested inflation was progressing towards the target, emphasizing its dedicated pursuit to achieve the 2% inflation objective. This decision follows a cumulative 100 basis points rate reduction over the last three meetings, initiating with a 50 basis point cut in September.
Looking ahead, the Fed's next policy meeting is scheduled for March 18-19, where officials will release their latest economic projections. According to CME Group's FedWatch Tool, there's a 77.6% probability of rates remaining steady and a 22.3% chance of a quarter-point rate cut.
Market sentiment was also dampened by Nvidia's 4.0% drop, following an 8.8% surge on Tuesday. The decline came after reports suggested the Trump administration might impose further restrictions on Nvidia's chip sales to China.
There was significant pressure on interest rate-sensitive housing stocks, causing a 2.2% dip in the Philadelphia Housing Sector Index. Telecom stocks also exhibited weakness, with the NYSE Arca North American Telecom Index falling by 1.5%. Software and commercial real estate sectors experienced notable declines, whereas airline and computer hardware stocks saw upward movement.
**Commodity and Currency Markets**
In commodities, crude oil futures are down by $0.14 to $72.48 a barrel, following a $1.15 decline to $72.62 in the previous session. Gold futures, after dropping $1.10 to $2,793.50 in the last session, have surged by $30.60 to $2,824.10 an ounce.
In currency exchange, the U.S. dollar is trading at 154.09 yen, down from 155.22 yen at Wednesday's New York close. Against the euro, the dollar is slightly lower at $1.0416 compared to $1.0421.
**Asia**
Asian markets mostly trended upwards in thin holiday trading on Thursday, as investors responded positively to robust U.S. tech earnings and looked for clarity on President Trump's tariff directions, particularly concerning Canada, Mexico, and China.
The yen gained against the dollar and euro amid indications that the Bank of Japan may continue raising interest rates, even as other banks reduce theirs. The U.S. dollar softened, and gold prices rose following the Federal Reserve's indication of no immediate rate cuts.
Meanwhile, oil prices showed mixed changes in Asian trade after dropping in the previous session, linked to data revealing an increase in U.S. inventories. The European Central Bank's meeting later in the day is expected to announce a 25 basis point rate cut, the first of four projected in 2025.Japanese markets saw a modest uptick as semiconductor stocks continued to rebound from the DeepSeek-related concerns. Tokyo Electron gained 1.9%, and Advantest climbed 3.2%. Conversely, SoftBank Group experienced a 1.1% decline following a Financial Times report that the company is contemplating a $25 billion investment in OpenAI. The Nikkei 225 Index edged up 0.3% to close at 39,513.97, while the more comprehensive Topix Index increased by 0.2%, ending at 2,781.93.
In Australia, markets reached unprecedented highs off the back of inflation data that spurred optimism for potential interest rate cuts by the Reserve Bank. The S&P/ASX 200 Index rose by 0.6% to 8,493.70, driven by gains in technology, mining, and energy stocks. Meanwhile, the All Ordinaries Index secured a 0.5% advance, closing at 8,745.90. A notable performer was Karoon Energy, which soared 7.7% after announcing a $120 million share buyback. In contrast, Zip Co. suffered a significant 25.4% decrease following underwhelming quarterly earnings.
In New Zealand, the S&P/NZX-50 Index experienced a 0.6% decline, reaching 12,928.38, marking its fourth drop in five trading days. Shares of Auckland International Airport fell nearly 2.5%. Meanwhile, markets in China, Hong Kong, Singapore, South Korea, Malaysia, and Taiwan remained closed for the Lunar New Year holiday.
**Europe**
European markets generally advanced on Thursday following the European Central Bank's decision to cut interest rates by 25 basis points as anticipated. The German DAX Index saw a 0.2% increase, while both the U.K.'s FTSE 100 Index and France's CAC 40 Index rose by 0.6%.
Economic reports revealed that the French economy contracted for the first time in almost two years in the fourth quarter, with GDP dropping by 0.1% after a 0.4% increase in the previous quarter, according to preliminary figures from INSEE.
Finland's Nokia saw gains after surpassing expectations with its fourth-quarter results and offered an optimistic forecast for 2025. Additionally, Swiss industrial leader ABB surged following the announcement of a $1.5 billion share buyback plan, prompted by robust order growth in the fourth quarter of 2024.
However, Deutsche Bank shares fell sharply, with the German bank reporting a larger-than-anticipated fall in fourth-quarter and full-year 2024 profits due to legal expenses and restructuring charges. Electrolux AB also faced a decline, citing growing uncertainty in the North American market and suspending its dividend for a third consecutive year. Additionally, semiconductor company STMicroelectronics experienced a downturn, projecting further sales declines in the first quarter of 2025 amid ongoing market challenges. Swedish retailer H&M similarly faced pressure, with fourth-quarter sales falling short of expectations.
**U.S. Economic News**
In the United States, the Commerce Department reported that economic growth for the fourth quarter of 2024 did not meet economists' expectations. GDP increased by 2.3% following a 3.1% rise in the third quarter, missing the anticipated 2.6% growth. The increase in GDP for the quarter was largely attributed to heightened consumer and government spending, which were partially offset by a decline in investment.
Additionally, a separate report from the Labor Department showed that initial claims for unemployment benefits declined more than anticipated for the week ending January 25th. Initial jobless claims dropped to 207,000, representing a decrease of 16,000 from the previous week's figure of 223,000, outpacing economists' projections for a reduction to 220,000. The four-week moving average also saw a minor decrease, falling to 212,500 from the prior week's 213,500.
At 10 am ET, the National Association of Realtors is set to release its monthly report on pending home sales for December. It is expected that pending home sales will rise by 0.4% for the month following a 2.2% surge in November.
