The major U.S. index futures are pointing to a higher open on Thursday, with stocks likely to add to the gains posted in the previous session.
The markets may benefit from continued optimism about a new stimulus bill after House Democrats delayed a vote on their coronavirus relief package.
The delayed vote on the $2.2 trillion Democratic bill, which Republican leaders have flatly rejected, is intended to give lawmakers more time to reach an agreement.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin failed to reach an agreement on a new bill during a meeting on Wednesday but noted talks will continue.
In a statement, Pelosi said she and Mnuchin found "areas where we are seeking further clarification" during the "extensive conversation," adding, "Our conversations will continue."
Buying interest may also be generated in reaction to a report from the Labor Department showing a bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended September 26th.
Stocks moved sharply higher in morning trading on Wednesday before seeing considerable volatility late in the session. The major averages pulled back well off their highs but moved back to the upside going into the close of trading.
The major averages all finished the day firmly in positive territory. The Dow jumped 329.04 points or 1.2 percent to 27,781.70, the Nasdaq climbed 82.26 points or 0.7 percent to 11,167.51 and the S&P 500 advanced 27.53 points or 0.8 percent to 3,363.00.
The volatility seen late in the trading day came amid uncertainty about a potential agreement on a new coronavirus stimulus bill.
The pullback by the major averages came after Senate Majority Leader Mitch McConnell said Republicans and Democrats remain "far apart" on a deal.
However, stocks rebounded as Mnuchin and Pelosi indicated discussions about a new bill would continue.
The morning rally on Wall Street came after Mnuchin said he is "hopeful" about reaching an agreement on a new stimulus bill.
"I say we're going to give it one more serious try to get this done and I think we're hopeful that we can get something done," Mnuchin said during the Delivering Alpha conference presented by CNBC and Institutional Investor. "I think there is a reasonable compromise here."
The markets also benefited from the release of some upbeat U.S. economic data, including a report from payroll processor ADP showing private sector employment surged up by more than expected in the month of September.
ADP said private sector employment spiked by 749,000 jobs in September after jumping by an upwardly revised 481,000 jobs in August.
Economists had expected employment to increase by 650,000 jobs compared to the addition of 428,000 jobs originally reported for the previous month.
The National Association of Realtors also released a report showing pending home sales jumped to a record high in the month of August.
NAR said its pending home sales index spiked by 8.8 percent to 132.8 in August after surging up by 5.9 percent to 122.1 in July. Economists had expected pending home sales to increase by 3.2 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Housing stocks ended the day significantly higher, resulting in a 1.6 percent advance by the Philadelphia Housing Sector Index.
Considerable strength was also visible among healthcare stocks, as reflected by the 1.5 percent gain posted by the Dow Jones U.S. Health Care Index.
Banking stocks also turned in a strong performance on the day, driving the KBW Bank Index up by 1.4 percent.
On the other hand, computer hardware stocks showed a notable move to the downside, dragging the NYSE Arca Computer Hardware Index down by 1.2 percent.
Commodity, Currency Markets
Crude oil futures are falling $0.62 to $39.60 a barrel after climbing $0.93 to $40.22 a barrel on Wednesday. Meanwhile, after sliding $7.70 to $1,895.50 an ounce in the previous session, gold futures are jumping $16.50 to $1,912 an ounce.
On the currency front, the U.S. dollar is trading at 105.57 yen versus the 105.48 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1761 compared to yesterday's $1.1721.
Asia
Asian stocks rose in thin holiday trading on Thursday, with optimism over a new stimulus package in the U.S. and positive ADP jobs data helping underpin investor sentiment.
Australian markets rose sharply to snap a three-day losing streak as fears of a second national Covid-19 wave eased and Prime Minister Scott Morrison said the country will open its border with New Zealand "very soon."
Investors also cheered the latest survey from IHS Markit showing that the manufacturing sector in Australia expanded at a faster rate in September. The manufacturing PMI for the month rose to 55.4 from 53.6 in August.
The benchmark S&P/ASX 200 Index advanced 57.00 points, or 1 percent, to 5,872.90, while the broader All Ordinaries Index ended up 60.10 points, or 1 percent, at 6,069.40.
Miners BHP, Rio Tinto and Fortescue Metals Group gained 1-2 percent as iron ore futures surged after a coronavirus outbreak at Australia's Port Hedland.
The big four banks rose between half a percent and 1 percent, while energy stocks such as Beach Energy, Origin Energy, Oil Search and Santos added 1-2 percent.
New Zealand shares advanced, with the benchmark NZX 50 Index ending up 65.45 points, or 0.6 percent, at 11,812.73. Heavyweight A2 Milk fell about 1 percent to extend declines for the fourth straight day, while Oceania Healthcare shares jumped 3.5 percent.
The Tokyo Stock Exchange in Japan suspended trading due to a technical issue. Markets in Taiwan, China and Hong Kong were closed for the Mid-Autumn Festival, while the South Korea market was closed for the Chuseok Festival.
The manufacturing sector in Japan continued to contract in September, albeit at a slower pace, the latest survey from Jibun Bank showed today with a seven-month high manufacturing PMI score of 47.7.
Large manufacturing in Japan weakened again in the third quarter of 2020, the Bank of Japan's quarterly Tankan Survey on business sentiment showed with a diffusion index score of -27.
Elsewhere, South Korea posted a merchandise trade surplus of $8.88 billion in September, Statistics Korea said.
Exports were up 7.7 percent year-over-year, beating forecasts for 2.0 percent following the 9.9 percent decline in the previous month. Imports were up an annual 1.1 percent versus forecasts for a decline of 4.9 percent following the 15.3 percent plunge a month earlier.
Europe
European shares have moved mostly higher on Thursday as investors express hopes for a U.S. stimulus deal and cheer signs of manufacturing growth in the region.
While the French CAC 40 Index has risen by 0.6 percent and the U.K.'s FTSE 100 Index is up by 0.2 percent, the German DAX Index has bucked the uptrend and edged down by 0.1 percent.
Shares of STMicroelectronics have moved sharply higher on the day after the chipmaker raised its 2020 revenue outlook.
Hennes & Mauritz AB has also jumped. After posting better than expected third-quarter earnings, the Swedish fashion brand said the worst of the pandemic crisis is behind it.
Travis Perkins has also risen. The distributor of building materials said that Stuart Chambers wishes to step down in the coming months as non-executive Chairman of the company.
Meanwhile, Bayer has slumped. The pharmaceutical and chemicals company has unveiled plans to cut jobs and exit non-strategic businesses or brands, as the coronavirus pandemic impacts its businesses. It expects to take a non-cash impairment charge on agricultural business due to low commodity prices.
Rolls-Royce Holdings has also plunged. The struggling aircraft engine maker announced plans to raise 2 billion pounds by selling shares to existing investors.
In economic news, IHS Markit's final Manufacturing Purchasing Managers' Index climbed to 53.7 in September from August's 51.7, in line with an earlier flash reading and its highest level since August 2018.
The eurozone's unemployment rate rose for a fifth consecutive month in August, Eurostat said. The seasonally adjusted jobless rate rose to 8.1 percent from 8.0 percent in July, which was revised from 7.8 percent. The latest rate was in line with economists' expectations.
Euro area producer prices continued to fall in August, though the pace of decline slowed more than expected, preliminary data showed.
U.S. Economic Reports
First-time claims for U.S. unemployment benefits declined by more than expected in the week ended September 26th, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims fell to 837,000, a decrease of 36,000 from the previous week's revised level of 873,000.
Economists had expected jobless claims to dip to 850,000 from the 870,000 originally reported for the previous week.
Meanwhile, the Commerce Department released a separate report showing a steep drop in U.S. personal income in the month of August, with the sharp pullback reflecting a decrease in unemployment insurance benefits.
The Commerce Department said personal income tumbled by 2.7 percent in August after rising by an upwardly revised 0.5 percent in July.
Economists had expected personal income to slump by 2.5 percent compared to the 0.4 percent increase originally reported for the previous month.
At the same time, the report said personal spending climbed by 1.0 percent in August after jumping by a downwardly revised 1.5 percent in July.
Personal spending was expected to increase by 0.8 percent compared to the 1.9 percent spike originally reported for the previous month.
At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of September.
The ISM's purchasing managers index is expected to inch up to 56.3 in September from 56.0 in August, with a reading above 50 indicating growth in the manufacturing sector.
The Commerce Department is also due to release its report on construction spending in the month of August at 10 am ET. Construction spending is expected to climb by 0.8 percent.
At 11 am ET, New York Federal Reserve President John Williams is scheduled to moderate a discussion with Merck (MRK) CEO Kenneth Frazier at a live-streamed webinar event held by the Economic Club of New York.
Williams will also give welcome remarks in a pre-recorded video at The Second New York Fed Conference on FinTech virtual event at 11 am ET.
Also at 11 am ET, the Treasury Department is due to announce the details of this month's auctions of three-year and ten-year note and thirty-year bonds.
Fed Governor Member Michelle Bowman is due to speak at the "Virtual Roundtable Discussion: Opportunities and Challenges for Home Ownership" hosted by the Montana State University Jake Jabs College of Business & Entrepreneurship at 3 pm ET.
Stocks In Focus
Shares of Bed Bath & Beyond (BBBY) are moving sharply higher in pre-market trading after the housewares retailer reported unexpected fiscal second quarter earnings on revenues that exceeded analyst estimates.
Special purpose acquisition company Mountain Crest Acquisition (MCAC) is also likely to see initial strength after announcing the signing of a definitive merger agreement to return Playboy Enterprises to the public markets.
Shares of PepsiCo (PEP) may also move to the upside after the snack and beverage giant reported better than expected fiscal third quarter results and provided upbeat full-year guidance.
For comments and feedback contact: editorial@rttnews.com