Friday July 26th

26-07-2019

US stock futures rise as Alphabet shares rally on strong earnings and big buyback, GDP beats

U.S. stock index futures moved higher on Friday after strong earnings from big tech companies such as Alphabet and Intel while the U.S. economy grew at a better-than-expected clip in the second quarter. Around 8:39 a.m. ET, Dow Jones Industrial Average futures advanced 72 points, indicating a gain of 52 points at the open. S&P 500 and Nasdaq 100 futures also pointed to a higher open. Alphabet reported better-than-expected earnings Thursday and announced a massive $25 billion share repurchase program. The results and buyback sent the stock up more than 8% in the premarket Friday. Intel also jumped 4.5% on earnings and revenue that topped analyst expectations. Client Computing, the company’s biggest division, generated $8.84 billion in sales, topping a FactSet estimate of $8.13 billion. Twitter shares gained more than 6% on the back of second-quarter results that topped estimates. The social media company also reported a 14% rise in monetizable daily active users. More than 40% of S&P 500 companies have reported quarterly earnings for the second quarter. Of those companies, 76.5% have posted a stronger-than-forecast profit, according to FactSet. The U.S. economy expanded by 2.1% in the second quarter, the Commerce Department said Friday. The broadest measure of the U.S. economy was expected to come in at 1.8%, according to economists surveyed in CNBC/Moody’s Analytics Rapid Update. The data release comes as investors await a potential rate cut from the Federal Reserve next week. Market expectations for a 25 basis-point rate cut were at 78.6% on Friday morning,  according to the CME Group’s FedWatch tool. But stocks closed lower on Thursday as investors considered the possibility that the Fed will not be as dovish as expected when it meets next week. This was on the back of strong economic data out on Thursday and comments from the European Central Bank that the risk of a recession in the region is low. Stocks in Asia saw broad declines on Friday, amid expectations the U.S. Federal Reserve could be less aggressive than expected with monetary policy when it meets next week. Mainland Chinese shares recovered from an earlier dip to end the trading day higher, as the Shanghai composite rose 0.24% to 2,944.54 and the Shenzhen component advanced fractionally to 9,349.00. The Shenzhen composite also gained slightly to 1,573.45. Hong Kong’s Hang Seng index fell 0.69%, as of its final hour of trading, after the city reported Thursday that it saw its biggest annual drop in exports in almost three and a half years in June. The Nikkei 225 in Japan slipped 0.45% to close at 21,658.15. The Topix index declined 0.4% to end its trading day at 1,571.52. In South Korea, the Kospi declined 0.4% to finish its trading day at 2,066.26. Oil prices rose on Friday and were on track for a weekly increase as geopolitical tensions over Iran remained unresolved, although flagging prospects for global economic growth amid the U.S.-China trade war capped gains. Brent crude futures were up 23 cents at $63.62 per barrel at 0922 GMT, equivalent to a weekly rise of around 1.8%. They fell 6% last week. U.S. West Texas Intermediate crude was 25 cents higher at $56.27 a barrel, a weekly gain of 1.1%. It fell 7.5% last week. Gold firmed on Friday, having shed 1% in the previous session on robust U.S. jobs data, with investors awaiting further economic readings from Washington that could drive sentiment going into next week’s Federal Reserve meeting. Spot gold rose 0.3% to $1,418.40 an ounce. U.S. gold futures gained 0.3% to $1,418.50.