Wall Street Eyes Positive Opening as Tech Giants Shine and Jobs Data Impresses
U.S. stock futures edged higher on Friday, indicating a positive opening for the major indices on Wall Street. Investors were encouraged by strong earnings from Apple and TSMC, solid labor market data, and hopes for a soft landing of the U.S. economy amid high inflation and interest rates.
The Dow Jones Industrial Average futures rose 0.2%, the S&P 500 futures gained 0.3%, and the Nasdaq 100 futures advanced 0.4% as of 6:30 a.m. ET.
Apple (NASDAQ:AAPL) and Taiwan Semiconductor Manufacturing Co (NYSE:TSM), two of the world’s largest technology companies, reported better-than-expected quarterly results on Thursday, boosting the sentiment in the sector. Apple also announced a $100 billion share buyback program, while TSMC said it plans to invest $100 billion over the next three years to expand its production capacity.
The U.S. labor market also showed signs of improvement, as the number of Americans filing new claims for unemployment benefits fell to a four-week low of 199,000 last week, according to the Labor Department. The figure was lower than the consensus estimate of 220,000 and the previous week’s revised level of 206,000.
Meanwhile, investors remained optimistic that the U.S. economy will avoid a hard landing, despite the challenges posed by high inflation and interest rates. The Federal Reserve signaled on Wednesday that it will raise its benchmark rate four times this year, starting in March, to combat inflation, which hit a 40-year high of 7% in December. However, the Fed also said it will maintain its flexible and data-dependent approach, and that it expects inflation to moderate in the second half of the year.
In other economic news, the National Association of Realtors will release the existing home sales data for December at 10 a.m. ET. Analysts expect a slight increase in sales to 6.1 million units, from 6.08 million units in November. The U.S. housing market faced several headwinds in 2023, such as high mortgage rates, low inventory, and affordability issues. However, mortgage rates have recently declined, which could improve the demand and supply conditions in the housing market.
On the political front, the U.S. Congress approved a bill that will keep the federal government funded until March, avoiding a potential shutdown. The bill passed the House and the Senate with bipartisan support, and President Joe Biden signed it into law on Thursday night. The bill also includes $7 billion in emergency aid for Ukraine, which is facing a military threat from Russia.
However, the bill does not resolve the remaining policy disputes that need to be addressed by lawmakers, such as the military aid to Ukraine and the border security funding. The bill also does not finalize the $1.7 trillion spending deal that was agreed upon earlier this month, but has not been voted on yet. The spending deal includes funding for infrastructure, climate, health care, and social programs, and is seen as a key part of Biden’s agenda.
In corporate news, Macy’s (NYSE:M), a U.S. department store chain, plans to cut 2,350 jobs and close five stores as part of its cost-cutting and restructuring efforts, according to media reports. The move comes amid pressure from activist investors, who are reportedly seeking a $5.8 billion buyout of the company. Macy’s also announced a leadership change, with a new CEO taking over in February.
In commodity markets, oil prices rose on Friday, putting them on track for a weekly increase. Brent crude, the global benchmark, added 0.7% to $86.32 a barrel, while West Texas Intermediate, the U.S. benchmark, gained 0.8% to $83.45 a barrel.
Oil prices were supported by several factors, such as the cold weather in North Dakota that reduced U.S. oil output, the geopolitical tensions in the Red Sea that disrupted tanker traffic, and the larger-than-expected draw in U.S. crude inventories. However, oil prices were also capped by the high levels of gasoline and distillate inventories, which reached multi-year highs, indicating weak demand.
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