U.S. stock index futures indicate a likely downturn at the opening on Thursday, as shares seem set to retrace gains achieved in recent sessions. Investors might be inclined to capitalize on recent market momentum, despite the Nasdaq and S&P 500 almost counteracting the declines of the previous week.
Concerns about interest rate prospects could exert downward pressure, with the Federal Reserve suggesting a less aggressive rate-cutting approach than initially anticipated. Furthermore, market activity may remain muted as traders likely extend their holiday breaks following Christmas Day on Wednesday.
On the economic front, data from the U.S. Labor Department reveals an unexpected slight drop in initial unemployment claims for the week ending December 21st. Initial jobless claims fell by 1,000, reaching 219,000, contrary to economists' predictions of a rise to 224,000.
Tuesday's abbreviated session saw significant advances as stocks surged, continuing the upward trend established in the previous sessions. Major indices closed at daily highs, with the Dow Jones climbing 390.08 points or 0.9% to 43,297.03, the Nasdaq ascending 266.24 points or 1.4% to 20,031.13, and the S&P 500 gaining 65.97 points or 1.1% to 6,040.04.
The rally on Wall Street was propelled by traders seizing stocks at relatively lower valuations following last week's downturn. Optimism over market trajectories persisted despite the Federal Reserve's revised plans for future rate cuts.
This upswing may have been inflated by trading on light volume, with many participants away for the holiday break. Additionally, an early market close on Tuesday could explain why some traders remained on the sidelines. The absence of key economic data, due to the rescheduling of reports on durable goods orders and new home sales to Monday, likely contributed to the subdued trading environment.
Brokerage stocks were notable performers, with the NYSE Arca Broker/Dealer Index rising by 1.7%. The retail sector also demonstrated strength, reflected in the 1.5% increase of the Dow Jones U.S. Retail Index. Networking, computer hardware, and banking stocks were among those sectors showing significant gains.
**Commodities and Currency Markets**
Crude oil futures are up $0.54, trading at $70.64 a barrel following a $0.86 rise to $70.10 per barrel on Tuesday. Gold futures have inched up by $6.40, reaching $2,641.90 an ounce, after a $7.30 increase in the previous session.
On currency markets, the U.S. dollar is trading at 157.78 yen, slightly up from 157.40 yen on Wednesday. Against the euro, the dollar is valued at $1.0401, marginally down from $1.0405.
**Asia-Pacific Overview**
Asian markets experienced mixed results in light holiday trading on Thursday, with regional currencies generally declining against a robust dollar and high Treasury yields amid uncertainty regarding the Federal Reserve's rate decisions and U.S. President-elect Donald Trump's tariff threats. Oil and gold posted modest gains in Asian markets.
Australia, New Zealand, and Hong Kong markets were closed for Boxing Day, while Indonesian markets remained shut for Christmas.
Mainland China's markets saw slight upticks after officials announced a plan to issue 3 trillion yuan (approximately $411 billion) in special treasury bonds next year, aiming to stimulate growth and counteract tariffs. The Shanghai Composite Index increased by 0.1% to 3,398.08, while the People's Bank of China maintained a steady interest rate at 2% on the one-year medium-term lending facility and executed a significant cash drainage action not seen since 2014 through a one-year policy tool.
In Japan, stock markets rallied as the yen remained near a five-month low. Bank of Japan Governor Kazuo Ueda's reaffirmation of a dovish stance, emphasizing the need to assess the impact of Trump's policies and global risks, buoyed sentiment. The Nikkei 225 Index rose by 1.1% to 39,568.06, and the broader Topix Index increased by 1.2% to 2,766.78.Toyota Motor experienced a significant surge of 6%, continuing its upward trajectory following reports that the automaker aims to double its return on equity target to 20% by approximately 2030. In a similar vein, Honda Motor saw a rise of 3.8%, Nissan Motor escalated by 6.6%, and Mitsubishi Motors marked an advancement of 6.5%.
In contrast, Seoul stocks experienced a decline, influenced by concerns over domestic political instability and volatility in the foreign exchange market. The Kospi index fell by 0.4%, settling at 2,429.67.
**European Nations**
The principal European markets remained closed on Thursday in observance of Boxing Day.
**U.S. Economic Updates**
The Labor Department released data indicating that first-time claims for unemployment benefits in the U.S. surprisingly saw a slight decrease in the week ending December 21st. Initial jobless claims were reported to have reduced to 219,000, a drop of 1,000 from the preceding week's stable figure of 220,000, whereas economists had anticipated an increase to 224,000.
Conversely, the four-week moving average, which often provides a more consistent reflection of trends, rose subtly to 226,500, an uptick of 1,000 from the prior week's fixed average of 225,500. Moreover, the count of continuing claims, indicating those receiving ongoing unemployment benefits, escalated by 46,000 to reach 1.910 million for the week ending December 14th, the highest level observed since November 2021. The four-week moving average for continuing claims also increased to 1,881,000, a rise of 3,250 from the preceding week's revised average of 1,877,750.
At 11 am ET, the Energy Information Administration is set to publish its report on oil inventories for the week ending December 20th. Expectations are that crude oil inventories will drop by 1.6 million barrels following a previous week's reduction of 0.9 million barrels. Meanwhile, the Treasury Department is scheduled to reveal the outcomes of its latest auction of $44 billion in seven-year notes at 1 pm ET.
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