U.S. equity futures traded mixed Thursday, with the Dow helped by fading Treasury bond yields and firmer corporate earnings, as investors looked to a key interest rate decision in Europe prior to the start of trading and Apple’s closely-watched update after the closing bell.
The European Central Bank is expected to raise its key refinancing rate by 75 basis points later this morning in Frankfurt, taking it to 2%, as officials grapple with double-digit inflation pressures and a burgeoning energy crisis in the world’s largest economic bloc.
Projections for its next move, however, are mixed, following a surprisingly smaller-than-expected 50 basis point increase from the Bank of Canada yesterday that suggests policy officials around the world are starting to asses the impact of their inflation fight on growth and employment prospects.
That has traders betting on smaller hikes from the Federal Reserve, as well, and although a 75 basis point move is locked-in for November, bets on a follow-on move of the same size in December have eased some 35 basis points from last week to around 42.5%.
Benchmark 10-year notes were holding at around 4.05% while the U.S. dollar index, which tracks the greenback against a basket of six global currencies, edged 0.36% higher to 110.082, but remains trading near the lowest levels in three weeks.
The boost from falling yields and a weaker dollar that would normally provide to stocks has been evident, with the S&P 500 rising for two of the past three sessions, but a series of weaker-than-expected Tech earnings — particularly Google (GOOGL) and Microsoft (MSFT) — has kept broader gains in check.
That puts a great deal of focus on tonight’s after-the-bell updates from Apple and Amazon AMZN, with investors keying on the former’s holiday quarter sales outlook and the latter’s indication of any weakness in its benchmark Web Services division.
That said, better-than-expected third quarter updates from Dow components Honeywell (HON) , Caterpillar (CAT) , Merck (MRK) and McDonald’s (MCD) are giving a solid boost to the start of trading ahead of third quarter GDP data and weekly jobless figures due at 8:30 am Eastern time.
Futures contracts tied to the S&P 500 are priced for a 6 point decline while those linked to the Dow Jones Industrial Average are priced for a 175 point advance. The tech-focused Nasdaq is priced for a 72 point decline on the back of a massive pre-market decline for Meta Platforms.
Meta Platforms shares, in fact, were marked 22.9% lower in pre-market trading, potentially wiping nearly $80 billion from the social media group’s value, following a dismal third quarter earnings update that forecast deeper losses ahead for its struggling metaverse project.
Ford (F) shares fell 1.7% after the carmaker narrowed its full-year profit guidance and booked a $2.7 billion charge linked to the wind-down of its self-driving business.
Twitter (TWTR) gained 1.05% as officials at the New York Stock Exchange prepared to suspend the shares from trading tomorrow ahead of the Delaware court’s deadline for Elon Musk to complete his $44 billion takeover of the social media group.
In overseas markets, the region-wide Stoxx 600 was down 0.7% in mid-day Frankfurt trading ahead of the ECB rate decision at 8:15 am Eastern time, while the FTSE 100 gained 0.08% in London.
Overnight in Asia, stocks rebounded from their lowest levels in more than two years with the region-wide MSCI ex-Japan index marked 0.8% higher heading into the close of trading. Japan’s Nikkei 225 fell 0.32%.