Wall Street eyes fourth day of gains with tech poised to lead again

US stock futures edged higher, leaving Wall Street on course for a fourth straight day of gains, with chipmakers expected to lead the rally.

  • Futures contracts Dow Jones Industrial Average YM00,
    rose 101 points, or 0.3%, to 31,114

  • S&P 500 ES00 futures contracts,
    gained 9.5 points, or 0.2%, to 3,857

  • Nasdaq 100 NQ00 futures,
    rose 38 points, or 0.3%, to 11,918

  • On Wednesday, the Dow Jones Industrial Average DJIA,
    rose 70 points, or 0.23%, to 31,038, the S&P 500 SPX,
    rose 14 points, or 0.36%, to 3,845, and the Nasdaq Composite COMP,
    gained 40 points, or 0.35%, to 11,362.

    What drives the markets?

    Tech stocks are expected to gain ground on Thursday, after South Korea’s Samsung 005930,
    the world’s largest semiconductor maker, reported a better-than-expected jump in second-quarter revenue.

    The news helped ease some fears about the extent of the sector’s downturn.

    The tech-heavy Nasdaq Composite Index has lost more than 27% so far in 2022, while the S&P Semiconductor & Semiconductor Equipment Index has fallen 37%.

    In pre-market commerce, chipmakers Intel INTC,
    and Nvidia NVDA,
    added 1.1% and 1.2% respectively.

    Investors are hoping the recent hit to equities means the market has a chance to be pleasantly surprised when the second-quarter earnings season kicks into full swing next week.

    But some are suspicious.

    “Equities could experience a second phase of a bear market due to weak earnings. A bottom is only likely to occur when unemployment rates are close to a peak, which could be around a year away,” said Trevor Greetham, head of multiple assets at Royal London Asset Management.

    “Broad diversification, active tactical asset allocation and disciplined downside risk management will be key to navigating the bumpy road ahead,” he added.

    Meanwhile, equity investors seem to have decided that the latest Federal Reserve minutes, released on Wednesday, contained little to worry about.

    Attention will now turn to a speech by St. Louis Fed Chairman James Bullard on Thursday and Friday’s nonfarm payrolls report for further clues to the Fed’s policy trajectory. The benchmark 10-year Treasury yield TMUBMUSD10Y,
    rose 5 basis points to 2.967%.

    In Europe, the German Dax 40 DAX,
    recovered slightly more ground, adding 1.6%, and the FTSE 100 UKX,
    in London climbed 1.2% after British media reported that Prime Minister Boris Johnson would step down.

    In Asia, the Shanghai Composite SHCOMP,
    rose 0.3% despite continued concerns over Beijing’s zero COVID 19 policy.

    Other markets

    Crude oil fell, with West Texas Intermediate CL.1,
    down 0.4% to $98.15 a barrel. The US benchmark has lost nearly $10 in the previous two sessions on concerns about slowing global demand. WTI jumped to over $130 a barrel in early March following Russia’s invasion of Ukraine as traders feared sanctions against Moscow could jeopardize supply.

    The DXY dollar index,
    was down 0.2% at 106.85. The DXY rose above 107, its highest level in 19 years, on Wednesday, as concerns over the European economy and political unrest in the UK put pressure on the euro and the pound.

    Gold GC00,
    rose 0.4% to $1,743 an ounce and silver gained 0.5% to $19.27 an ounce. Both precious metals have been hit by the stronger dollar recently, but that has left the gray metal relatively cheap compared to its bullion counterparts.

    “The currency ratio, which is the ratio between the two precious metals, is now around 90, whereas one would normally expect it to remain between 50 and 80 based on historical averages,” Ipek noted. Ozkardeskaya, senior analyst at Swissquote Bank.

    BitcoinBTC USD,
    rose 0.5% to $20,505 but still down almost 70% from its all-time high as traders watch the recent turmoil in the crypto sector warily.

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