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The Thursday Market Minute

  • Global stocks gains, pulling U.S. equity futures into the green, follow yesterday's Fed rate cut and easing trade and political tensions in Europe and Asia.
  • Fed Chairman Jerome Powell says the U.S. economy is in a "good place" after third rate reduction of the year, but signals a pause on further near-term moves.
  • Corporate earnings continue to surprise to the upside, with Apple and Facebook adding to recent bullish reports in an improving third quarter earnings season 
  • US equity futures suggest modest opening bell gains on Wall Street, including a record high open for the S&P 500, ahead of earnings from Bristol Myers, Kraft Heinz and Clorox as well as weekly jobless claims and core PCE Price index data at 8:30 am Eastern Time.

Market Snapshot

U.S. stock futures extended gains Thursday, setting up the S&P 500 for another record high open, as investors parsed through details of yesterday's Federal Reserve rate decision and reacted to stronger-than-expected third quarter earnings from tech giants Apple (AAPL) - Get Free Report and Facebook (FB) - Get Free Report .

Fed Chairman Jerome Powell told reporters in Washington yesterday that the economy was in a "good place", with stable growth, low inflation and a robust jobs market, even as he laid out his case for making the the rate cut of the year that sets the central bank's target lending range at 1.5% to 1.75%.

"We took this step to help keep the economy strong in the face of global developments and to provide some insurance against ongoing risks," Powell explained. "We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook."

A tweak in the Fed's statement -- substituting a vow to monitor the effects of its recent moves for a previous reference to "act as appropriate" on rates in the near term -- took the steam out of markets last night, and clipped gains for the U.S. dollar this morning, but the supportive Fed stance, along with what is turning out to be a better-than-expected third quarter earnings season, has kept U.S. stocks near record highs for most of the past two weeks.

With just under 60% of the S&P 500 reporting so far this season, 74.1% of companies have beaten earnings estimates, a figure that is firmly ahead of the long-term average of 65% and largely in-line with the past two years, according to Refinitiv data. The collective bottom line of S&P 500 companies is expected to decline by 1.6% from last year, but that is markedly better than the 2.9.% forecast from just a few weeks ago.

And with U.S.-China trade talks advancing, the economy growing at a near 2% clip and Britain's Brexit drama tamed for the moment with a pre-Christmas election, global investors appear more than content to add to risk positions ahead of tomorrow's October jobs report from the Bureau of Labor Statistics.

U.S. equity futures, as well, are pointing to a record high open for the S&P 500, which closed at an all-time high of 3,046.77 points last night. The broadest benchmark of U.S. shares is priced for a 4 point opening bell gain while the Dow Jones Industrial Average is expected to gain 25 points when trading kicks off at 9:30 am Eastern time.

Apple shares are likely to be an early mover of note after the iPhone maker said solid services revenues and good demand for its wearable technology drove the group to a stronger-than-expected fourth quarter, and forecast sales of between $85.5 billion to $89.5 billion for the three months ending in December.

Facebook, too, surprised investors with a better-than-expected bottom line of $2.12 per share as ad revenues increased and more users joined its trio of Facebook, WhatsApp and Instagram apps, setting up shares in the social media giant for a record high open on Wall Street later today.

Overnight in Asia, the Fed rate decision, as well as comments from Beijing that suggested the easing of sanctions on U.S. agricultural products, helped regional stocks rise to a fresh three-month high, while the Nikkei 225 added 0.37% to close at a new 52-week peak of 27,927.04 points.

European stocks edged higher, as well, at the start of trading in Frankfurt with the Stoxx 600 rising 0.1%, although gains were held in check by a firmer euro, which was marked at 1.1161 against a weaker U.S. dollar. Britain's FTSE 100, meanwhile, slipped 0.21% as the pound climbed to 1.2940 against the greenback. 

Global oil prices were also on the march, reverse some of yesterday's losses after the U.S. Energy Department said  U.S. crude stockpiles rose 5.7 million barrels in the week ending October 25, with the total topping 438.8 million barrels. 

Brent crude contracts for December delivery, the global benchmark, were seen 36 cents higher from their Wednesday close to trade at $60.97 per barrel, while WTI contracts for the same month were marked 30 cents higher at $55.36 per barrel.