Opening Comment — Thursday, May 08, 2025
DJIA: 41,113.97, up 284.97
S&P 500: 5,631.28, up 24.37
NASDAQ: 17,738.16, up 48.50
Stocks higher following trade developments
Stock futures are higher Thursday morning after President Donald Trump said a U.S. – U.K. trade deal had been reached, with details to come later this morning. Investors are also looking forward to today’s economic releases, including data on initial and continuing jobless claims and preliminary first-quarter nonfarm productivity and unit labor costs. As of 7:16 AM ET, the Dow is rising 0.9%, while the S&P 500 is up 1.0%. The Nasdaq 100 is increasing 1.3% relative to fair value on the GLOBEX.
U.S. equities were higher on Wednesday as the Federal Reserve (Fed) held interest rates steady at the conclusion of a two-day meeting. Fed Chair Jerome Powell stated, “if the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” and that “the effects on inflation could be short lived, reflecting a one-time shift in the price level,” but warned the impact might also be persistent. The Dow was up 0.7%, while the tech-heavy Nasdaq Composite rose 0.3%. The S&P 500 increased 0.4% with eight of 11 sectors finishing in positive territory. The Consumer Discretionary sector was the top performer, rising 1.0%, while the Communication Services sector was the bottom performer, falling 1.8%.
On the data front, preliminary first-quarter nonfarm productivity is expected to decline by 0.8% quarter-over-quarter (QOQ), versus the prior quarter’s increase of 1.5%, while unit labor costs are forecasted to have increased at an annualized 5.1% pace, up from the prior quarter’s 2.2%. Initial jobless claims for the week ending May 3 are expected to come in at 230,000, lower than the prior week’s 241,000. Continuing claims are expected to fall slightly to 1.90 million for the week ending April 26 from the prior week’s 1.92 million. The finalized March reading of wholesale inventories is expected to show an increase of 0.5% month-over-month (MOM), similar to the prior reading, while March’s wholesale trade sales is expected to come in at 0.9% MOM versus the prior month’s increase of 2.4%. The New York Fed will release their April Survey of Consumer Expectations, including a measure of inflation expectations.
Across the pond, European stocks are higher in mid-day trading as the Bank of England cut their policy rate by 25 basis points (0.25%) to 4.25% in a 5-2-2 vote, with some members preferring a 50 basis point (0.50%) cut and others no change. Germany’s industrial production came in stronger-than-expected, rising by 3.0% MOM in March, while the country’s trade surplus expanded in March as exports increased more than forecasted while imports fell.
Overnight in Asia, stocks were mixed following the People’s Bank of China lowering the seven-day reverse repo rate as previously announced.
In FOREX trading, the dollar is higher following recent central bank meetings and policy rate changes.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 1.6% higher at $58.99/barrel following a greater-than-expected decline in reported crude oil inventories.
In the metals complex, gold is 1.3% lower at $3,347.40/ounce following a strengthening dollar.