(RTTNews) - Following an upbeat report on GDP, stock futures are pointing to a positive open on Thursday. Nevertheless, rising oil prices may pressure the markets, with light trading likely to lead to increased volatility.
U.S. economic growth in the second quarter far exceeded the previous estimate, according to a report released by the Department of Commerce on Thursday, with the better than expected growth primarily due to an upward revisions to exports.
The report showed that gross domestic product increased at an annual rate of 3.3 percent in the second quarter compared to the advance estimate of 1.9 percent growth. Economists had been expecting GDP growth for the quarter to be revised up to 2.7 percent.
At the same time, the Department of Labor released its report on initial jobless claims in the week ended August 23rd, showing that jobless claims fell in line with economist estimates compared to an upwardly revised reading for the previous week.
The report showed that jobless claims fell to 425,000 from the previous week's revised figure of 435,000. Economists had expected jobless claims to fall to 425,000 from the 432,000 originally reported for the previous week.
Nonetheless, rising oil prices may keep buying interest muted, with the price of crude hovering above the $119 a barrel mark amid concerns that Tropical Storm Gustav will interrupt supplies from the Gulf of Mexico. With the strength in the commodity, oil-sensitive stocks such as the airline sector may see weakness early on.
The financial sector may come into focus once again on Thursday, with Fannie Mae (FNM) in the spotlight. After the markets closed on Wednesday, the mortgage backer revealed major changes to its top management with the appointment of David Hisey as Chief Financial Officer, Peter Niculescu as Chief Business Officer and Michael Shaw as Chief Risk Officer.
Fannie Mae said the senior executive appointments, effective immediately, were aimed at overseeing and implementing its recently announced capital management and credit loss reduction plan.
Other stocks in the financial sector that may open on the upside include MBIA (MBI) Ambac Financial (ABK), Merrill Lynch (MER) and Wachovia (WB).
On the earnings front, fine jewelry retailer Tiffany & Co. (TIF) reported higher earnings for the second quarter, driven by strong sales growth in the Asia-Pacific and European regions combined with higher operating margins. The company also lifted its full-year earnings outlook.
Commenting on the results, Tiffany's chairman and chief executive officer Michael Kowalski said, "Tiffany's global retail operations once again demonstrated the ability to generate strong operating earnings growth despite weakness in certain individual country markets. Our continued expansion throughout Asia and Europe should contribute to increasingly consistent and resilient long-term earnings growth."
Meanwhile, Sears Holding (SHLD) reported disappointing second quarter results. Excluding one-time items, earnings per share came in at $0.21 for the second quarter, while analysts were expecting a profit of $0.33 per share.
Stocks ended Wednesday's session with notable gains following the release of an economic report showing a bigger than expected increase in durable goods orders. Nonetheless, going into a holiday weekend, trading was light on the session, increasing volatility.
Earlier in the day, the Department of Commerce released its report durable goods orders, which showed that orders increased by much more than expected in the month of July. The increase reflected strong demand for goods meant to last for at least three years.
The major averages ended the session well off of their intraday highs, although they still closed sharply higher. The Dow closed up 0.8 percent, the Nasdaq closed up 0.9 percent and the S&P 500 closed up 0.8 percent.
Among individual stocks, Energy Conversion Devices (ENER) may see notable strength on Thursday after reporting its fourth quarter results. The maker of solar energy products said it swung to a profit on higher sales and stronger gross margins.
On the other hand, Williams-Sonoma (WSM) may show weakness early on in the session. While the retailer saw better than expected second quarter results, it lowered its net revenue guidance range for the third quarter.
As mentioned above, oil prices are extending a recent upward move amid concerns that Tropical Storm Gustav could result in a disruption in supplies from the Gulf of Mexico. The price of oil is currently up $1.50 at $119.65 after ending Wednesday's trading up $1.88 at $118.15 a barrel.
Meanwhile, gold futures are currently advancing $13.80 to $847.80 an ounce after ending Wednesday's session up $5.90 at $834 an ounce.
On the currency front, the U.S. dollar is trading at 109.43 yen compared to 109.4985 yen at the close of New York trading on Wednesday. Against the euro, the dollar is currently trading at $1.4764.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Thursday. Stocks in the region experienced seesaw trading despite Wall Street seeing notable strength overnight.
Meanwhile, European stocks have moved to the upside, benefiting from the better than expected U.S. economic data. The French CAC 40 index and the German DAX index are up 1.6 percent and 1 percent, respectively, while the U.K.'s FTSE 100 index is up 1.2 percent.
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