Stock Market Futures Edge Higher After Stocks Notch 3-Day Win Streak
U.S. stock futures edge slightly higher in the pre-market trading, suggesting Wall Street would extend the previous day’s gains. The build-up of bullish sentiment came after tech stocks boosted the Nasdaq Composite into its third straight positive day on Thursday. Amongst them, Microsoft (NASDAQ: MSFT) had the most impact on the S&P 500 and the Nasdaq on Thursday. As for the Dow, Salesforce (NYSE: CRM) had the greatest positive impact on the benchmark as the software stock gained 2.55% on Thursday.
“We saw during the depths of the pandemic that tech stocks and their earnings held up the best, so I think a lot of investors are going back to the well, given we have a Covid resurgence,” Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said. “Long term interest rates coming down as much as they have also make those stocks more attractive.”
The stock market sentiment took a hit after Thursday showed an unexpected jump in jobless claims. The new unemployment numbers jumped to 419,000 this week, well above consensus estimates of 360,000. Thankfully, the strong corporate earnings have helped to recalibrate investor sentiment. More investors are now looking at the fundamentals, and tech stocks are leading the charge in the stock market today. The Dow, S&P 500, and Nasdaq 100 futures were all in the positive territory, moving 0.46% and 0.48% and 0.48% respectively at 6:54 a.m. ET.
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Snap’s Huge Earnings Beat Put Social Media Stocks In Focus
Snap (NYSE: SNAP) saw its revenue more than double in the latest quarter, easily topping expectations amid a continued rebound in the advertising market. The social media company added 13 million daily average users sequentially in the period, bringing its total to 2943 million. From the earnings report, it shows that the company has been successful in luring young people to their platform, and the advertisers want in. As a result, SNAP stock is jumping and is trading over 17% higher in its pre-market trading as of 7:04 a.m. ET.
“Our second-quarter results reflect the broad-based strength of our business, as we grew both revenue and daily active users at the highest rates we have achieved in the past four years,” Chief Executive Evan Spiegel said in a statement.
Combined with equally strong earnings from Twitter (NYSE: TWTR), the report projects strong results next week from Facebook (NASDAQ: FB) and Alphabet (NASDAQ: GOOGL). Other social media stocks like Pinterest (NYSE: PINS) are also feeling the lift despite no recent news regarding the company. Pinterest will report Q2 earnings on July 27 and that should provide a perspective to investors about PINS stock. With many popular social media companies gaining users and generating more revenue with new and interesting features, do you have some of the popular social media stocks on your watchlist right now?
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Oil Down, But Not Out
The oil price was under pressure this week, but both Brent and WTI futures remained above the $70 mark. Prices of oil and other riskier assets tumbled earlier this week. There have been concerns about the economic impact of surging COVID-19 infections of the Delta variant. The good news is, the rising vaccination rates will limit the impact of surging infections over time. And that hopefully shouldn’t be too big of an issue for the oil sector.
Of course, the Biden administration’s push for clean energy has many investment firms moving away from fossil fuels. However, investors remain encouraged by Thursday’s data from the U.S. Energy Information Administration that showed a 121,000-barrel draw in gasoline inventories. This is an indication that demand remains high amid the summer driving season.
Meanwhile, demand growth could outpace new supply. Following the resolution of the OPEC+ dispute earlier in the month, we will see 400,000 barrels a day added to the market from August until supply cuts imposed at the outset of COVID-19 are fully reversed. “With demand holding up, the market is starting to sense the 400kb/d increase in OPEC (OPEC+) will not be enough to keep the market balanced. Inventories continue to fall, both in the U.S. and across the OECD,” ANZ Research analysts said in a note.
Didi Stock Under Pressure As China Plans Unprecedented Penalties
DiDi Global’s (NYSE: DIDI) U.S. IPO in late June was initially considered a success, with the company raising $4.4 billion from the offering. That’s until Didi’s mobile app was forcibly withdrawn from app stores in China, halting it from adding new customers. More importantly, it seems like Beijing is considering harsh penalties including a massive fine. And this could be bigger than the $2.8 billion that Alibaba (NYSE: BABA) paid earlier this year.
A forced delisting of DIDI stock from the New York Stock Exchange is also being considered. For those unfamiliar, the Chinese authorities are punishing the company for going forward with the U.S. IPO despite resistance from China’s Cyberspace Administration claiming Didi had illegally collected user’s data.
Didi saw its stock price slide by more than 11% on Thursday. And with such uncertainties lingering around this company, one should think twice about buying DIDI stock on dips.
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More Corporate Earnings Underway
With Intel (NASDAQ: INTC), AT&T (NYSE: T), Southwest Air (NYSE: LUV) all posting better-than-expected earnings results, investors are getting increasingly comfortable with the stock market. Sure, economic recovery is never a perfect straight line. However, given the strong corporate earnings, we are seeing so far, the bulls appear to be winning the fight against the bears right now.
This morning, we have some of the top industrial stocks reporting. They include Schlumberger (NYSE: SLB), Honeywell (NASDAQ: HON), and Kimberly-Clark (NYSE: KMB), just to name a few. If anything, the turnaround from the selloff early in the week shows that companies have been resilient through all this. Certainly, there will be questions on how this rally could continue. But for the time being, momentum seems to be at investors’ back.
Also, Wall Street is also gearing up for earnings from the Big Tech next week. Major tech companies including Microsoft, Alphabet, Apple, Facebook, and Amazon are set to report second-quarter earnings next week.
