NEW YORK, Jan 26 ― US stock indexes were set to open higher today after data showing a resilient labour market and better-than-expected economic growth last quarter helped ease worries of a deep recession, while Tesla's bullish outlook added to the cheer.
A report from the Labour Department showed initial claims for state unemployment benefits dropped to a seasonally adjusted 186,000 for the week ended January 21, lower than 192,000 from the week before.
Separately, the Commerce Department said gross domestic product (GDP) increased at an annualized rate of 2.9 per cent in the fourth quarter, above expectations of a 2.6 per cent rise.
“For almost a year, the Federal Reserve has been trying to achieve a soft landing by raising short-term interest rates just-enough to bring down inflation without causing a recession,” said Richard Flynn, managing director at Charles Schwab.
“It's clear the economy remains relatively strong in the face of the Fed's efforts, suggesting they're succeeding.”
The GDP report could mark the last quarter of solid growth before the impact of the Federal Reserve's aggressive tightening spree starts reflecting, with most economists expecting a mild recession by the second half of 2023.
Money markets are pricing in a 25-basis-points rate hike by the Fed next week, with a terminal rate of 4.9 per cent in June, still below the 5 per cent rate backed by many policymakers.
After Microsoft Corp's disappointing outlook spooked markets in the previous session, Tesla Inc's better-than-expected quarterly results reassured investors that the EV maker could cope with a slowing economy in 2023.
Tesla jumped 8.7 per cent in premarket trading, lifting other EV makers such as Rivian Automotive, Lucid Group and NIO between 4 per cent and 5.4 per cent.
Growth stocks have been on a winning spree in January, with the S&P 500 Growth index recouping more than half of the losses logged last month.
Keeping a lid on gains for Dow e-minis was chemical firm Dow Inc that slid 3.3 per cent after it missed Wall Street estimates for quarterly profit, hurt by higher energy costs, weaker demand and supply chain disruptions.
Software firm IBM Corp slid 2.3 per cent after it missed annual cash flow targets and also flagged slowing growth in its software and consulting businesses.
At 8.49am ET, Dow e-minis were up 81 points, or 0.24 per cent, S&P 500 e-minis were up 22.25 points, or 0.55 per cent, and Nasdaq 100 e-minis were up 121.75 points, or 1.03 per cent.
Mastercard Inc added 0.9 per cent after reporting a better-than-expected fourth-quarter profit, supported by resilient spending volumes. Rival Visa Inc rose 0.4 per cent.
Chevron Corp gained 3.6 per cent after the oil major said it would triple its budget for share buybacks to US$75 billion.
American Airlines climbed 1.3 per cent on expectations of higher profit for the full year, buoyed by strong demand for air travel, while Southwest Airlines Co slipped 2.9 per cent on warning of a loss in the first quarter. ― Bernama
