By William Watts and Chris Matthews, MarketWatch
Qualcomm shares slump in heavy premarket trade
Stock-index futures edged higher Thursday, a day after equities
sank in apparent response to Federal Reserve Chairman Jerome
Powell's failure to affirm market expectations the next move in
rates would be a cut.
The flow of corporate earnings also continues as investors also
look ahead to economic data, including April jobs figures due on
Friday.
What are major indexes doing?
Dow Jones Industrial Average futures rose 24 points, or 0.1%, to
26,414, while S&P 500 futures gained 7.40 points, or 0.3%, to
2,930.50. Nasdaq-100 futures were up 28 points, or 0.4%, to
7,773.75.
What's driving the market?
Stocks turned lower on Wednesday, with the S&P 500 falling
22.10 points, or 0.8%, to close at 2,923.73 for its biggest one-day
drop since March 22. The Dow fell 162.77 points, or 0.6%, to end at
26,430.14, while the Nasdaq Composite fell 45.75 points, or 0.6%,
to finish at 8,049.64.
The turn lower by equities on Wednesday came after Powell, in a
news conference, described below-target inflation readings as
"transitory"
(http://www.marketwatch.com/story/fed-sticks-with-patient-policy-notes-weaker-core-inflation-2019-05-01)
and gave no indication the central bank is in a hurry to cut
interest rates.
Powell's position is in contrast to what investors in fed funds
futures had been predicting -- just before Powell's press
conference those markets were indicating a more than 60% chance
that the Fed's cut rates before year-end, as of Thursday morning,
that probability had fallen to 49.9%, according to CME Group.
Read:Economist Mohamed El-Erian: When central banks don't
understand the markets, watch out
(http://www.marketwatch.com/story/when-central-banks-dont-understand-the-markets-watch-out-warns-economist-mohamed-el-erian-2019-05-02)
U.S.-China trade talks are again getting the attention of market
participants, after Politico
(https://www.politico.com/story/2019/05/01/us-china-deal-tariffs-1400007)
and CNBC reported that the two sides are nearing a deal, with an
announcement possible as soon as next Friday
(https://www.cnbc.com/2019/05/01/trump-news-us-china-trade-deal-possible-by-next-friday.html).
The Wall Street Journal, however, reported Wednesday evening
(https://www.wsj.com/articles/u-s-china-conclude-productive-trade-talks-but-sticking-points-remain-11556718515)
that sticking points remain, including U.S. objections to Chinese
subsidies to domestic businesses.
Read:Powell's press conference draws rave reviews for simplicity
of Fed's message
(http://www.marketwatch.com/story/powells-press-conference-draws-rave-reviews-for-simplicity-of-the-feds-message-2019-05-01)
What stocks are in focus?
First-quarter corporate results continue to flood in.
Shares of chip maker Qualcomm Inc. (QCOM) fell 1.6% in premarket
trade, despite the company topping estimates
(http://www.marketwatch.com/story/qualcomm-stock-slides-after-earnings-apple-settlement-to-add-nearly-5-billion-2019-05-01)
for the quarter in a Wednesday evening earnings release.
Opinion:Apple deal doesn't solve Qualcomm's problems
(http://www.marketwatch.com/story/apple-deal-doesnt-solve-qualcomms-problems-2019-05-01)
(http://www.marketwatch.com/story/apple-deal-doesnt-solve-qualcomms-problems-2019-05-01)Shares
of Dow Inc. (DOW) may be in focus after reporting first-quarter net
sales that fell 10% from a year ago but remained above the
consensus forecast
(http://www.marketwatch.com/story/dow-revenue-falls-less-than-expected-sees-discrete-headwinds-in-second-quarter-2019-05-02).
3M Co. (MMM) announced Thursday a deal to buy privately held
wound-care company Acelity Inc. in a deal valued at $6.7 billion
(http://www.marketwatch.com/story/3m-to-buy-acelity-in-a-67-billion-deal-including-debt-2019-05-02),
including debt.
What are analysts saying?
"Central bankers always describe inflation, whether it be rising
or falling as 'transitory,' and it was never a realistic
probability that the Fed would open the door to the prospect of
rate cuts when wage growth is above 3% and yesterday's ADP payrolls
report for April added another 275,000 new jobs," said Michael
Hewson, chief market analyst at CMC Markets UK, in a note. "This
suggests that whatever one thinks of the U.S. labor market it is
nowhere near as tight as some might suggest."
What;s on the economic calendar?
Traders will turn their attention Thursday to reports on weekly
jobless claims, productivity growth and unit labor costs, due at
8:30 a.m. Eastern Time, which will give clues to the state of the
labor market, and whether rising, but still moderate, wage
inflation can continue to grow with limited impact on corporate
profit margins.
Productivity growth indicates that companies are producing more
goods and services per worker hour, which can enable companies to
offer higher pay without accepting lower profits.
Economists polled by MarketWatch expect new applications for
unemployment insurance to fall from to 215,0000 in the week ended
April 27, from 230,000 the week prior, while they predict labor
force productivity to grow at 3.7% in the first quarter, and for
unit labor costs to fall by 0.2%.
At 10 a.m., The Commerce Department will release data on factory
orders for the month of March, with economists expecting to see a
1.7% increase.
(END) Dow Jones Newswires
May 02, 2019 07:44 ET (11:44 GMT)
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