Stock futures point higher after U.K., EU strike tentative Brexit deal
By Thu, Oct 17, 2019
Stock-index futures pointed to a higher start for Wall Street Thursday, getting a boost after U.K. and European Union negotiators agreed on a draft Brexit deal.
Read: EU and U.K. leaders say Brexit deal has been agreed
The tentative pact, which was hailed by European Commission President Jean-Claude Juncker and British Prime Minister Boris Johnson must still be approved by the U.K. parliament and other EU member states. Johnson has called for a U.K. parliamentary vote on Saturday.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YMZ19, +0.34% rose 100 points, or 0.4%, at 27,040, while S&P 500 futures ESZ19, +0.32% advanced 10.85 points, or 0.4%, to 3,002.25. Nasdaq-100 futures NQZ19, +0.35% gained 30.50 points, or 0.4%, to 7,979.
Stocks ended with small losses in a range-bound session on Wednesday. The Dow DJIA, -0.08% lost 22.82 points, or 0.1%, to close at 27,001.98, while the S&P 500 SPX, -0.20% gave up 5.99 points, or 0.2%, to end at 2,989.69. The Nasdaq Composite COMP, -0.30% finished at 8,124.18, off 24.52 points, or 0.3%.
What’s driving the market?
The Brexit headlines sent the British pound GBPUSD, +0.2884% soaring and also lifted European stocks, though analysts cautioned that the agreement could still be derailed. Northern Ireland’s Democratic Unionist Party, a key ally of U.K. Prime Minister Boris Johnson’s Conservative Party, said it remained opposed to the draft agreement.
“It remains to be seen whether the reaction is short-lived as the politicians go toe-to-toe again at the weekend, but in the meantime the very possibility of an agreed outcome to the painful Brexit saga has resulted in a relief rally, both financial and psychological,” said Richard Hunter, head of markets at Interactive Investor.
Meanwhile, U.S. stocks have reacted positively overall to the start of third-quarter earnings season.
“Even though it is very early in the Q3 earnings reporting period, investors have been encouraged by the better-than-expected results for the large diversified banks and selected health care companies,” said Sam Stovall, chief investment strategist at CFRA, in a note.
That enthusiasm was offset Wednesday by weaker-than-expected September retail sales numbers, while uncertainty around U.S.-China trade talks continues to cast a cloud over the market. Overall, the potential for elevated volatility is expected to remain a concern for investors since October has recorded nearly 40% higher volatility than the other 11 months since World War 2, Stovall said, noting CFRA still expects to see share prices end the year higher on an improvement in earnings per share expectations.
What companies are in focus?
Shares of Honeywell International Inc. HON, -0.01% may be in focus after its third-quarter results topped Wall Street forecasts.
Earnings were due ahead of the bell from Morgan Stanley MS, +0.61% and Philip Morris International Inc. PM, +1.00%, among others.
Shares of Netflix Inc. NFLX, +0.71% were 7.8% higher in premarket action after it reported third-quarter results late Wednesday. The streaming service said it added 6.77 million new paying subscribers in the quarter, with only 500,000 coming from the U.S.
Opinion: Netflix finally admits the obvious: Competition from Apple and Disney will hurt
Shares of International Business Machine Inc. IBM, -0.62% were in focus after it reported less revenue than Wall Street expected after Wednesday’s closing bell. The stock was off 4.8% in premarket activity.
What’s on the economic calendar?
Weekly jobless claims data is due at 8:30 a.m. Eastern Time. Economists surveyed by MarketWatch, on average, look for first-time claims of 215,000 for the week ended Oct. 12, up from 210,000 the previous week.
Separately, data on September housing starts and building permits are also due at 8:30 a.m., as is the Philadelphia Fed’s regional activity index for October. Data on September industrial production and capacity utilization is set for 9:15 a.m.
Federal Reserve Board Gov. Michelle Bowman is scheduled to deliver remarks at an event in Chicago at 2 p.m. New York Fed President John Williams is due to deliver a speech and take part in a discussion in Manhattan at 4:20 p.m.
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