– The major U.S. index futures are pointing to a higher opening on Thursday, with sentiment improving following the release of the weekly jobless claims data, which showed an unexpected decline in claims. The U.S. House of Representatives set to vote on a proposal put forward by the Republicans to end the stalemate on the U.S. debt deal. Hopes of clinching a deal along with the positive jobs data may lead to bargain hunting following recent weakness.
Traders may also focus on the pending home sales data to be released after the markets open. In the eventuality of the stalemate over the debt deal continuing, it is likely that the market give up the early momentum
The lean run on Wall Street continued on Wednesday, as the lack of a U.S. debt deal and the Fed’s commentary regarding slowing growth gave traders reason to sell stocks. The major averages opened lower, as traders digested weak durable goods orders data and remained concerned about the debt deal. After moving sideways until late afternoon trading, the indexes legged down further in the final two hours of trading in reaction to the Fed’s Beige Book.
The Dow Industrials ended down 198.75 points or 1.59 percent at 12,303 and the Nasdaq Composite Index fell 75.17 points or 2.65 percent before closing at 2,765. Meanwhile, the S&P 500 Index ended at 2,765, down 27.05 points or 2.03 percent.
Twenty-eight of the thirty Dow components closed lower, with Alcoa (AA), Bank of America (BAC), Cisco Systems (CSCO), Caterpillar (CAT), United Technologies (UTX), Microsoft (MSFT), 3M Co. (MMM), General Electric (GE), Disney (DIS), DuPont (DD) and American Express (AXP) declining sharply.
Among the sector indexes, the NYSE Arca Biotechnology Index declined 3.42 percent, the NYSE Arca Securities Broker/Dealer Index fell 3.38 percent, the NYSE Arca Software Index slid 3.12 percent, the NYSE Arca Networking Index slumped 7.33 percent and the Philadelphia Semiconductor Index receded 3.77 percent. The networking space saw marked weakness in reaction to disappointing earnings report fro Juniper, which fell over 20 percent in the session.
Wednesday’s retreat took the Dow below its recent trading range and also below a host of key moving averages. The failure of lawmakers to strike a deal to raise the U.S. debt ceiling may accentuate the weakness, which poses the risk of the Dow tumbling to its next support around 12,091. However, a rebound could see the index making an attempt at its 100-MA (12,342) and its next resistance around 12,365.
On the economic front, U.S. durable goods orders fell 2.1 percent month-over-month in June, with a 29 percent drop in orders for aircraft and parts dragging the headline number lower. Even excluding transportation, order growth was anemic at 0.1 percent. Orders for non-defense capital goods, excluding aircrafts, which are considered a measure of future capital spending, fell 0.4 percent. However, Shipments of this category rose 1.1 percent.
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