Stock market today: Nasdaq plans to break out of correction territory, bond yields fall
Stocks rebounded on Thursday as China cut interest rates and US bond yields fell.
future for the
Dow Jones Industrial Average
pointed to an open 103 points or 0.3% higher, after the index fell 339 points on Wednesday to close at 35,028.
was on track to open 0.3% in the green with heavy tech
is poised for a 0.7% increase. The S&P 500 and Nasdaq fell 1% and 1.2% respectively in the previous session.
“Futures are marginally higher as China made two surprise interest rate cuts overnight, helping stocks rebound,” wrote Tom Essaye, founder of Sevens Report Research.
The People’s Bank of China cut its one-year prime rate to 3.7% from 3.8% and its five-year prime rate to 4.6% from 4.65%. That’s a bright spot for the world’s second-largest economy, which is slowing and sheltering sales for many large US companies.
That’s certainly helping the stock market, but there’s another positive factor that’s particularly supporting tech stocks: US bond yields are down a tick. The 10-year Treasury yield was down 1.82% from Wednesday’s closing level of 1.87%. Falling long-term bond yields make future earnings more valuable, and many tech companies are counting on sizable profits many years from now.
Thursday’s early rally in tech stocks comes after the Nasdaq fell into correction territory, down nearly 11% from its all-time high in late November at Wednesday’s close. Since the peak of the index, the 10-year yield has fallen 1.55% as the Federal Reserve plans to raise short-term interest rates and reduce its bond portfolio, which injects less money in the bond market, lowers bond prices and increases bond yields.
But yields aren’t the only thing that will hold investors’ attention on Thursday. Fourth quarter earnings are coming. In the spotlight, the results of Netflix (ticker: NFLX) as well as American Airlines (AAL). The companies far exceeded earnings expectations at the start of the reporting season.
Elsewhere, initial weekly jobless claims were 286,000, worse than the 225,000 expected and an increase from last week’s result of 230,000.
was up 0.1%. In Asia, the mood was upbeat: China cut its benchmark mortgage rate for the first time in nearly two years, and data showed Japanese exports soared 17.5% last month, ahead of expectations. that of Hong Kong
Hang Seng Index
increased by 3.4%.
Here are five stocks in motion on Thursday:
Unilever (UL) rose 0.9% in the US premarket, after the company announced it had dropped its $68 billion bid for
GlaxoSmithKlineof (GSK) in the field of consumer health. GSK shares were down 1% in premarket trading.
Lower benchmark rates in China gave a boost to Chinese tech stocks, in addition to a rebound in US-listed tech companies.
Ali Baba (BABA) and
JD.com (JD) soared in Hong Kong trading, with their U.S.-listed shares up around 5.9% and 6.5% in the New York premarket.
United Airlines (UAL) slid 0.9% after the company reported a loss of $1.60 per share, better than expected loss of $2.11 per share, on sales of $8.19 billion, above expectations of $7.97 billion.
Alcoa (AA) gained 2.5% after the company reported adjusted earnings of $2.50 per share, beating estimates of $1.93 per share, on sales of $3.3 billion, over above expectations of $2.4 billion.