The major U.S. index futures are currently pointing to initial strength on Wall Street on Friday, with stocks likely to move mostly higher following the mixed performance seen in the previous session.
Ongoing optimism about the outlook for the economy may contribute to strength on Wall Street despite recent concerns about the Federal Reserve lowering interest rates slower than previously anticipated.
The Fed is still widely expected to lower rates by a quarter point next month, but CME Group’s FedWatch Tool currently indicates a 24.0 percent chance the central bank will leave rates unchanged in December.
Stocks may also benefit from an extended pullback by treasury yields, with the yield on the benchmark ten-year note continuing to give back ground after reaching a nearly three-month high on Wednesday.
Following the steep drop seen during Wednesday’s session, the major U.S. stock indexes turned in a mixed performance during trading on Thursday. The Nasdaq and the S&P 500 regained ground, but the narrower Dow saw further downside to close lower for the fourth straight day.
The major averages finished the day on opposite sides of the unchanged line. While the Dow dipped 140.59 points or 0.3 percent to 42,374.36, the S&P 500 rose 12.44 points or 0.2 percent to 5,809.86 and the Nasdaq climbed 138.83 points or 0.8 percent to 18,415.49.
The rebound by the tech-heavy Nasdaq was partly due to a surge by shares of Tesla (NASDAQ:TSLA), with the electric vehicle maker soaring by 21.9 percent.
The spike by Tesla came after the company reported better than expected third quarter earnings and CEO Elon Musk said his “best guess” is “vehicle growth” will reach 20 to 30 percent next year.
Shares of UPS (NYSE:UPS) also saw significant strength after the delivery giant reported third quarter results that exceeded analyst estimates on both the top and bottom lines.
On the other hand, a nosedive by shares of IBM (NYSE:IBM) weighed on the Dow, with the tech giant plunging by 6.2 percent after reporting weaker than expected third quarter revenues.
Fellow Dow component Honeywell (NASDAQ:HON) also tumbled by 5.1 percent after the conglomerate reported better than expected third quarter earnings but revenue missed estimates.
Boeing (NYSE:BA) also moved to the downside after the aerospace giant’s machinists union rejected a new labor deal, extending a six-week strike.
Most of the major sectors ended the day showing only modest moves, although substantial weakness was visible among airline stocks, with the NYSE Arca Airline Index plunging by 3.5 percent.
Southwest Airlines (NYSE:LUV) led the sector lower, plummeting by 5.6 percent even though the airline reported better than expected third quarter results.
Gold stocks also showed a substantial move to the downside despite an increase by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.9 percent.
On the other hand, housing stocks saw considerable strength on the day, driving the Philadelphia Housing Sector Index up by 1.5 percent.
The strength among housing stocks came after the Commerce Department released a report showing new home sales surged to their highest level in over a year in September.