Technology stocks, specifically chipmakers, could lead from the front on Thursday as a stellar third-quarter earnings report from Taiwan Semiconductor Manufacturing Company Ltd. TSM is triggering positive sentiment toward all artificial intelligence plays. Oil prices have rebounded and gold traded at a fresh record, while bond yields held steady ahead of a slew of market-moving data that include retail sales, a regional manufacturing activity index, industrial production, and jobless claims.

Earnings news could provide an offsetting impact in the eventuality of the market construing the economic data as inclement. Netflix, Inc. NFLX is the first among the mega-cap earnings due after the market close and the results could evince interest among traders and set the tone for the tech reporting season.

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY edged up 0.42% to $584.76 and the Invesco QQQ ETF QQQ jumped 0.83% to $495, according to Benzinga Pro data.

Cues From Last Session:

Small-caps ripped higher on Wednesday, extending their recent gains amid hopes of a benign economic environment but the major averages opened on a tentative note. Solid earnings reports from financial companies and strong gains by real-estate and utility stocks helped the major indices close firmly in the green.

The Dow Jones Industrial Average turned solidly higher immediately after spending the better part of the session above the unchanged line. The 30-stock blue-chip average ended at a fresh high, although it did not have enough momentum to break above its Oct. 15 intraday high of 43,277.78.

The S&P 500 Index and the Nasdaq Composite had a lackluster first-half before picking up momentum in the afternoon.

Of the 11 S&P 500 sector classes, only communication services and consumer discretionary stocks declined in Wednesday’s session.

Insights From Analysts:

Delving into the small-cap rally that has been on, LPL Financial Chief Technical Strategist Adam Turnquist said after being stuck in a consolidation phase over the past few months, small-caps have picked up some momentum in recent sessions, with the growth outlook recently improving — underpinned by better-than-feared labor market conditions — and increased visibility into Fed rate cuts, he said.

The strategist noted that the Russell 2,000 Index, or RTY, has rallied off the lower end of its rising price channel. “Recent strength in the banking space — the RTY’s largest sector by weighting — has further supported small caps,” he said.

Technically, a close above 2,275 would confirm a breakout from its current symmetrical triangle and leave the 2021 highs (2,243) as the next resistance hurdle to clear, Turnquist said, adding that momentum indicators have also recently turned bullish, adding to the evidence of a topside breakout.

“Despite the improving absolute performance, the RTY vs. S&P 500 ratio chart still remains in a downtrend and below its declining 200-day moving average (DMA),” he said. A close above the July highs would validate a trend reversal in favor of small caps outperforming, he added.

Meanwhile, a fund manager thinks AI-levered companies could be defensive plays. Louis Navellier said, “Semiconductor demand has become the new proxy for global growth trends, being incorporated into almost everything, and also has geopolitical implications with technology export controls in place and China continuing to saber rattle about taking Taiwan back.”

“The upshot here is the inference that AI will still have legs even if we slide into a global recession in ’25,” he added.

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Upcoming Economic Data:

• The Labor Department is scheduled to release the weekly jobless claim report at 8:30 a.m. EDT. Economists, on average, expect the number of individuals claiming unemployment insurance to come in at 260,000 in the week ended Oct. 12, up from 258,000 in the previous week.
• The Commerce Department will release its September retail sales report at 8:30 a.m. EDT. The consensus estimates call for a 0.3% month-over-month increase in headline retail sales and a more modest 0.1% rise in retail sales, excluding the volatile auto sales. This compares to 0.1% increases for both in August.
• The Philadelphia Fed is due to release the results of its manufacturing survey at 8:30 a.m. EDT. The diffusion index of business activity is expected to rise from 1.7 in September to 3 in October.
• The Federal Reserve will release its industrial production report for September at 9:15 a.m. EDT. The consensus estimate models a 0.2% month-over-month decline in industrial output compared to 0.8% growth in August.
• The Commerce Department’s business inventories report, due at 10 a.m. EDT, is expected to show a 0.3% month-over-month increase in business inventories for August, slightly slower than July’s 0.4% increase.
• The National Association of Home Builders will release its housing market index for October at 10 a.m. EDT. The headline index, which measures confidence among homebuilders, is expected to rise a point from September to 42. A reading below 50 suggests a lack of confidence.
• The Energy Information Administration will release its weekly oil inventories report at 11 p.m. EDT.
• The Treasury is scheduled to auction four- and eight-week bills at 11:30 a.m. EDT.

Stocks In Focus:

• Alcoa Corporation AA climbed nearly 5% in premarket trading following the aluminum maker’s quarterly results, and TSMC surged up over 8% on a beat-and-raise quarter.
• Other stocks moving on earnings are CSX Corporation CSX (down about 5%) Nokia Oyj NOK (down nearly 6%), and Steel Dynamics, Inc. STLD (up over 3%).
• Blackstone Inc. (BX), Marsh & McLennan Companies, Inc. MMC, Travelers Companies, Inc. TRV, KeyCorp KEY, and M&T Bank Corporation MTB are among the noteworthy companies reporting ahead of the market opening.
• Those reporting after the close include Netflix, Intuitive Surgical, Inc. ISRG, Crown Holdings, Inc. CCK, WD-40 Company WDFC, and Western Alliance Bancorporation WAL.
• Expedia Group, Inc. EXPE climbed over 7.7% on the news that Uber Technologies, Inc. UBER might be interested in buying the company.
• Lucid Group, Inc. LCID plunged over 15% on a common stock offering.

Commodities, Bonds And Global Equity Markets:

Crude oil futures are reversing course and were up modestly after their recent pullback and gold futures traded at a record. Bitcoin BTC/USD slipped over 1% over the past 24 hours and was at a sub-$67K level.

The 10-year U.S. Treasury note yield was little changed at 4.036%.

The Asian markets ended mixed on Wednesday, as the Japanese, Chinese, Hong Kong, Indian, and South Korean markets retreated. Most other markets ended on a firm note, tracking higher energy prices and the positive close on Wall Street overnight.

European stocks traded in the green in the early hours, thanks to earnings optimism.

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