By Peter Nurse
Investing.com - U.S. stocks are set to weaken at the open Thursday, snapping a four-day win streak, as earnings season continues against a backdrop of mounting tensions between the U.S. and China.
At 7:20 AM ET (1120 GMT), S&P 500 Futures traded 18 points, or 0.6%, lower, Nasdaq Futures down 136 points, or 1.3%. The Dow Futures contract fell 143 points, or 0.5%.
On Wednesday, the Dow Jones Industrial Average closed 0.9% higher, the fourth positive day in a row, while the S&P 500 gained 0.9% and the Nasdaq Composite added 0.6%.
However, the corporate world is taking notice of the recent flare-up in tensions between the U.S. and China, with Washington imposing restrictions on employees of the telecom equipment maker Huawei and completing measures against social networking application TikTok.
China has vowed to retaliate, although it has reiterated its commitment to the phase 1 trade deal with the U.S. this week.
Economic news out of China earlier Thursday was more positive, as the country became the first major global economy to return to growth in the wake of the Covid-19 pandemic.
The U.S. continues to suffer from a second surge in the Covid-19 virus, with another 60,000 new cases reported on Wednesday, according to CDC data.
The U.S. has the world’s largest number of coronavirus cases and deaths, and it’s reporting rising levels at a time when many other countries appear to have gotten a grip on their outbreaks (notwithstanding a flurry of localized flare-ups in recent days).
The earnings season remains in focus Thursday, with Johnson & Johnson (NYSE:JNJ) reporting a 35% hit to second-quarter profit, but still able to raise full-year guidance.
Bank of America (NYSE:BAC) stock dropped 2.5% premarket after reporting a drop of more than 50% in profit as it set aside $4 billion for potential loan losses tied to the coronavirus pandemic.
By contrast, Morgan Stanley (NYSE:MS) climbed 1.2% premarket after reporting strong numbers across the board, and its provisions, already small, actually dropping.
There’s some key U.S. economic data due Thursday at 8:30 AM ET, with the weekly initial claims likely to continue the gradual improvement in the employment picture. Also, retail sales are expected to show a gain of 5% in June, a pickup but not quite May’s massive 17.7% jump.
Oil prices eased Thursday, after OPEC and allies such as Russia agreed to ease record supply curbs from August, though the drop was cushioned by hopes for a swift pick-up in U.S. demand after a big drawdown from the country's crude inventories.
At 7:20 AM ET, U.S. crude futures traded 1.1% lower at $40.75 a barrel, while Brent fell 0.7% to $43.48.
Elsewhere, gold futures fell 0.3% to $1,807.95/oz, while EUR/USD traded at 1.1401, down 0.1%.