Stock futures in the U.S. are indicating a brighter start on Friday, as investors react positively to strong earnings from tech giant Amazon.com. Despite a challenging week, these well-received results have helped lift sentiment.
Key Market Details
- Dow Jones Industrial Average futures (YM00, +0.32%) rose 95 points or 0.3%, reaching 32,971.
- S&P 500 futures (ES00, +0.61%) gained 23 points or 0.6%, reaching 4,180.
- Nasdaq 100 futures (NQ00, +0.95%) increased 122 points or 0.9%, reaching 14,316.
Previous Day Recap
On Thursday, the market performance was underwhelming as the Dow Jones Industrial Average (DJIA) experienced a decline of 252 points, or 0.76%, closing at 32,784. Meanwhile, the S&P 500 (SPX) declined by 50 points, or 1.18%, closing at 4,137. The Nasdaq Composite (COMP) also faced a drop of 226 points, or 1.76%, closing at 12,596.
Market Analysis
For the week, the S&P 500 has seen a decline of 2.1%. According to UBS, the majority of S&P 500 constituents have witnessed a decrease in their share prices since last Friday.
Factors Influencing the Markets
One significant factor driving the market is the earnings report from Amazon.com (AMZN, -1.50%), which exceeded expectations. The company's progress in improving its margins, both in its retail business and in cloud services, has been well-received. Similarly, Intel (INTC, -0.94%) also reported earnings that beat estimates.
Global Risk Sentiment Lifted by Tech Earnings and China's Industrial Profit Growth
Solid earnings from post-market U.S. tech giants Amazon and Intel, along with better-than-expected industrial profits in China, have boosted global risk sentiment. Stocks in all geographies are trading in the green, according to Krupa Patel, head of international market intelligence at JPMorgan.
China reported a significant 11.9% year-over-year growth in industrial profits for September.
While there were some negative earnings reports, such as Ford Motor Co. withdrawing guidance and Enphase Energy becoming the latest solar company to issue a profit warning, the overall market sentiment remains positive.
Crude-oil futures also saw a rise after a U.S. strike on Iran-related facilities in Syria.
Looking ahead, the economic calendar for Friday includes the PCE price index, which is the Fed's preferred measure of inflation. It is expected to see a monthly rise of 0.3% at the core level. While no changes are expected to interest rates from the Fed next week, the focus will be on their commentary regarding the possibility of further rate hikes in December.
Choppiness in the Market Expected to Persist
Market volatility is projected to persevere as a result of robust economic data releases. Investors are currently waiting for signs that the economy is slowing down without collapsing and for the rate shock to subside. Analysts, led by Mark Haefele, Chief Investment Officer for UBS Global Wealth Management, anticipate that both of these developments are likely to occur in the fourth quarter.
