The Friday Market Minute

  • Global stocks drift lower ahead of U.S. GDP data later today and a mixed set of earnings last night on Wall Street.
  • Analysts are looking for Q1 GDP growth of around 2% as the U.S. economy rides the longest advance on record later this summer.
  • The U.S. dollar trades near a two-year high against a basket of its global peers as major economies continue to suffer from trade disputes and slowing growth.
  • Global oil prices retreat on bets that record U.S. production rates and a change in tack from OPEC members later this spring will clip crude gains in the months ahead.
  • U.S. equity futures suggest a 65 decline for the Dow ahead of the Commerce Department's GDP data at 8:30 am Eastern time and first quarter earnings from Chevron, Exxon Mobil and Colgate-Palmolive.

Market Snapshot

Global stocks drifted lower Thursday as investors focused on a key reading of U.S. economic growth later in the session and the spillover from a mixed set of earnings last night on Wall Street.

The U.S. dollar index, which tracks the greenback against a basket of six global peers, held near a two year high of 98.28 in overnight trade before paring gains in the European session ahead of today's first quarter GDP reading from the Commerce Department, which is expected to show the economy grew at a 2% clip over the three months ending in March.

The solid U.S. expansion, which will hit an historic high of ten consecutive years later this summer, however, contrasts sharply with weakening data from around the world, as well as dovish signalling from major central banks, all of which has softened currencies in major markets and boosted the value of the dollar while raising questions over the near-term health of corporate profitability.

That said, U.S. earnings continue to impress, and despite notable forecast downgrades this week from the likes of Intel Inc (INTC - Get Report) and 3M Co. (MMM - Get Report) have rattled investors in certain sectors, the overall tenor of this reporting season has been solid, dovetailing with a string of better-than-expected readings for the domestic economy. 

Early indications from U.S. equity futures suggest caution on Wall Street ahead of the first quarter GDP reading at 8:30 am eastern time, as well as earnings from oil major Chevron (CVX - Get Report) with contracts tied to the Dow Jones Industrial Average indicating a 70 point pullback and those linked to the S&P 500 guiding to a 7 point dip after industrials dragged the benchmark lower last night.

Exxon Mobil Corp. (XOM - Get Report)  shares tumbled 28% after it posted much softer-than-expected first quarter earnings Friday as weaker industry margins, thanks in part to high U.S. gasoline inventories, hit its bottom line.

Ford Motor Co. (F - Get Report) shares were indicated sharply higher after the carmarker posted stronger-than-expected first quarter earnings thanks to a surge in U.S. demand for its iconic pick-up trucks that offset weakening international demand.

Starbucks Corp. (SBUX - Get Report) shares eased from an all-time high Friday after the world's biggest coffee chain posted stronger-than-expected second quarter earnings, and boosted its full-year outlook, thanks to surprisingly solid same-store sales at home and market share gains in China.

Amazon (AMZN - Get Report) shares, curiously, were only modestly higher at $1,919.75 each after is blowout first quarter earnings report, which saw profits rise to $3.6 billion on sales of $59.7 billion as its cash-generating Web Services division continue to win market share.

A modest sales outlook, however, as well as slowing revenue growth across the broader company, kept investors cautious, as did a move towards next-day shipping for Amazon Prime customers that could increase near-term expenses and eat into the group's bottom line. 

Another notable pre-open story came from Uber Technologies, with the ride sharing group setting the indicative price of its planned IPO  that would value it at around $85 billion, well below the $120 billion valuation investors had pegged prior to the debut of rival Lyft Inc. (LYFT) last month.

European stocks were similarly softer, with the Stoxx 600 benchmark edging just 0.08% higher by mid-day of trading and bourses around the region recording similar percentage gains on another heavy day of reporting for regional blue chips.

Asia stocks, too, were largely unmoved in overnight trading, with the Nikkei 225 slipping 0.22% in Tokyo to end the week at 22,258.73 points while the region-wide MSCI Asia ex-Japan index eased 0.1% heading into the final hours of trading.

Global oil markets reacted to the broader economic concerns, as well as a stronger dollar, to pare weekly gains for both Brent and WTI crude, as well as speculation that OPEC members will soon agree to increase production now that U.S. sanctions on Iran are set to curb global supply in the months ahead.

Brent crude contracts for June delivery, the global benchmark for oil prices, were marked $1.59 cents lower from their Thursday close in New York and changing hands at $72.76 per barrel while WTI contracts for the same month were seen $1.19 cents lower at $64.02 per barrel.