Markets Seek To Hold Onto Momentum Even As Friday's Jobs Data Trigger Anxiety

(RTTNews) - The major U.S. index futures are pointing to a modestly higher opening on Thursday, with futures trimming much of their early gains. After Chinese manufacturing data, which was not as worse as expected, triggered a rally in Asia and later in Europe, the momentum faltered in Europe. European stocks are now mixed. The weekly jobless claims report showed a more than expected increase in claims. Apprehension ahead of Friday's payrolls report could trigger some anxiety among traders despite the momentum built up on Wednesday.

U.S. stocks advanced strongly on Wednesday, as risk appetite re-emerged amid the release of fairly positive private payrolls data, gain by commodities and deflation data released by Eurostat. The major averages opened higher and moved sideways till late morning trading. After giving back some of the gains by the mid-session, the averages rose steadily in the afternoon, closing notably higher.

The Dow Industrials ended up 235.57 points or 1.47 percent at 16,285, the S&P 500 Index closed 35.94 points or 1.91 percent lower at 1,920 and the Nasdaq Composite closed at 4,620, up 102.84 points or 2.28 percent.

Twenty-eight of the thirty of the Dow components closed higher, with Cisco Systems (CSCO), Chevron (CVX), Disney (DIS), General Electric (GE), Home Depot (HD), Intel (INTC) and Nike (NKE) leading the gains.

Among the sectors, biotechnology, basic material, oil, gold, retail, housing, computer hardware and semiconductor stocks were among the best performers.

On the economic front, ADP released its private payrolls numbers for September, showing an addition of 200,000 jobs. Although this was ahead of expectations for an increase of 190,000 jobs, considering the downward revision to August numbers by 4,000, the payroll gains were roughly in line.

The results of the MNI Indicators' business survey showed that the Chicago business barometer fell to 48.7 in September, signaling a contraction. The index was down from 54.4 in August and below the consensus estimate of 53.6. The news orders, production and order backlogs indexes were all below the '50' cut-off mark.

Currency, Commodity Markets

Crude oil futures are rising $0.65 to $45.74 a barrel after slipping $0.14 to $45.09 a barrel on Wednesday.

The previous session's decline came amid the release of the weekly petroleum status report, which showed that crude oil stockpiles rose by 4 million barrels to 457.9 million barrels in the week ended September 25th. Inventories remained near levels not seen for this time of year in at least the last 80 years.

Gasoline inventories rose by 3.3 million barrels and were near the upper limit of the average range. Meanwhile, distillate stockpiles declined by 0.3 million barrels but were in the middle of the average range for this time of the year.

Refinery capacity utilization averaged 91.20 percent over the four weeks ended September 25th compared to 91.90 percent over the four weeks ended September 18th.

Gold futures are receding $1.60 to $1,113.60 an ounce. In the previous session, the December futures ended at $1,115.20 an ounce, down $11.60.

Among currencies, the U.S. dollar is trading at 120.21 yen compared to the 119.88 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1143 compared to yesterday's $1.1177.

Asia

The Asian markets closed mostly higher, encouraged by the positive lead from Wall Street overnight and relief over Chinese manufacturing data that was not as bad as feared. The New Zealand market bucked the uptrend with a modest drop. The Chinese and Hong Kong markets were closed for the Golden Week holiday.

The Japanese market closed notably higher for the second straight session. The Nikkei 225 Index opened slightly higher but rose steadily from late morning trading until the mid-session. After moving sideways in the afternoon, the index ended up 334.27 points or 1.92 percent at 17,722.

A majority of stocks advanced in the session, led by export, financial real estate and utility stocks. Meanwhile, construction and some food stocks lost ground.

Australia's All Ordinaries Index hovered in positive territory throughout the session before ending up 85.50 points or 1.69 percent at 5,144.

On the economic front, the results of a private survey by Markit and Caixin confirmed that the Chinese manufacturing sector contracted by the most in 6-1/2 years. The manufacturing PMI came in at 47.2 in September, down from 47.3 in August but higher than the flash estimate of 47. The composite PMI, calculated by taking into account both the manufacturing and non-manufacturing PMIs, fell 0.8 points to 48.

Meanwhile, official estimates released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed that their manufacturing PMI edged up to 49.8 in September from 49.7 in August. Meanwhile, the non-manufacturing PMI came in at 53.4 in September, the same as in August.

The results of the Bank of Japan's quarterly Tankan survey showed that sentiment among large manufacturers fell more than expected in the third quarter. The corresponding index slipped 3 points to 12 compared to the reading of 13 expected by economists. However, the large non-manufacturers' index rose 2 points to 25. Large manufacturers are expected to increase their capital spending by 10.9 percent, above expectations for an 8.6 percent increase.

A report released by the Australian Industry Group showed that manufacturing activity in Australia accelerated in September, with a PMI score of 52.1.

Europe

European stocks have also started on a positive note, with the major averages in the region trading notably higher in early trading. However, since then the averages have trimmed their gains and are currently mixed.

In corporate news, Bayer said it has trimmed the targeted gross proceeds and price range for the issuance of the shares of Covestro AG, ahead of the planned stock market listing of the polymer company, formerly known as Bayer MaterialScience.

On the economic front, revised estimates released by Markit showed that manufacturing activity in the eurozone slowed as estimated in September. The manufacturing PMI fell to a 5-month low of 52.3 from 52 in August.

The German manufacturing PMI for September was downwardly revised to 52.3 from the flash estimate of 52.5, while the French factory PMI was upwardly revised to 50.6 from 50.4, representing an increase from 48.3 in August.

Data released by Markit and the Chartered Institute of Procurement and Supply showed that the U.K. manufacturing PMI fell less than estimated to 51.5 in September from 51.6 in August. Economists expected a reading of 51.3.

U.S. Economic Reports

Automakers are scheduled to release their monthly sales results for September. Economists expect total vehicle sales to come in at a seasonally adjusted annual rate of 17.5 million units, up from 17.8 million units in August.

The Labor Department reported that jobless claims rose 10,000 to 277,000 in the week ended September 26th from the previous week's unrevised average of 267,000 in the week ended September 19th. The consensus estimate called for an increase in claims to 272,000.

The four week average fell 1,000 to 270,750. Continuing claims calculated with a week's lag also declined to 2.191 million in the week ended September 19th from 2.244 million in the week ended September 12th.

Markit is due to release final results of its U.S. manufacturing survey for September at 9:45 am ET. The consensus estimate calls for a reading of 53 for the month, in line with the flash estimate but down from 53.8 in August.

At 10 am ET, the Institute for Supply Management is scheduled to release the results of its national manufacturing survey for September. Economists expect the manufacturing index to slip to 50.5 in September from 51.1 in August.

Growth in manufacturing activity unexpectedly slowed in August, as the manufacturing index fell to 51.1 from 52.7 in July, while economists expected a reading of 52.8. The pace marked the slowest rate of expansion since May 2013.

The new orders index came in at 51.7 and the order backlogs index was at 46.5, suggesting a contraction for the third straight month. The number of employees index fell 1.5 points to 51.2, reflecting the weakest reading since April.

Around the same time, the Commerce Department is due to release its construction spending report for August. The consensus estimate calls for a 0.6 percent month-over-month increase in construction spending.

Construction spending rose 0.7 percent month-over-month in July, in line with expectations. Annually, spending growth was 13.7 percent. Private residential construction spending climbed 1.1 percent month-over-month and private non-residential spending was up 1.5 percent. On the other hand, public construction spending fell 1 percent.

The Treasury Department is set to make announcements concerning next week's auctions of 3-year and 10-year notes and 30-year bonds at 11 am ET.

San Francisco Federal Reserve Bank President John Williams is due to deliver an outlook speech in Salt Lake City, Utah, at 2:30 pm ET.

Stocks in Focus

General Electric announced separate agreements to sell its tank car fleet assets and railcar repair facilities to Marmon Holdings and its remaining rail car leading business to Wells Fargo (WFC). The company did not reveal the terms of the deals, which are in line with its previously announced strategy of focusing on its high value industrial businesses.

Macerich (MAC) said its board has authorized the repurchase of up to $1.2 billion worth of its common stock over the next 24 months.

Schnitzer Steel (SCHN) announced the completion of the integration of its auto parts and metals recycling business into a single auto and metals recycling business in the fourth quarter, in line with its revised operating structure. The company also announced preliminary fourth quarter results, expecting operating income of about $16 million and adjusted earnings of 27-30 cents per share, ahead of the 23 cents per share consensus estimate.

FreightCar America (RAIL) announced the completion of the sale of its railcar repair and maintenance services business to Appalachian RailCar Services for an aggregate purchase price of $20 million in cash and the assumption of some liabilities.

Standard & Poor's announced that Verisk Analytics (VRSK) will replace Joy Global (JOY) in the S&P 500 Index after the close of trading on October 7th. Joy Global will replace Thoratec (THOR), which is set to be acquired by St. Jude Medical (STJ), in the S&P MidCap 400 Index.