Dow futures pull back after 5-day rally, with earnings in focus

U.S. stocks were poised for a day of mild losses on Thursday, with the Dow industrials on track to pull back from a five-day rally driven partly by optimism over the U.S. economy.

Traders appeared to be pausing for breath as they looked ahead to prominent earnings releases, including from Dow components Travelers and Microsoft, in what is shaping up to be an upbeat season.

Readings on weekly jobless claims and the Philly Fed index are on deck ahead of the open.

Futures for the Dow Jones Industrial Average YMU8, -0.24% fell 39 points, or 0.2%, to 25,122, while those for the S&P 500 index ESU8, -0.29% dropped 6.75 points, or 0.2%, to 2,809.25. Futures for the Nasdaq-100 index NQU8, -0.37% gave up 16 points, or 0.2%, to 7,388.50.

The premarket pullback comes after the Dow DJIA, +0.32% on Wednesday logged its longest winning streak in two months, ending 0.3% higher, and the S&P 500 SPX, +0.22% closed with a 0.2% gain. The Nasdaq Composite Index COMP, -0.01% finished less than a point lower, slipping back from a record close scored on Tuesday.

The muted action on Thursday came as traders absorbed recent market-moving events, including Federal Reserve Chairman Jerome Powell’s two-day congressional testimony, upbeat economic data and a raft of largely positive earnings.

The earnings season was expected to continue at full speed on Thursday, with Travelers Cos. Inc.TRV, +0.94% , Philip Morris International Inc.PM, -0.22% and Domino’s Pizza Inc.DPZ, +0.58% on the docket ahead of the open.

Capital One Financial Corp. COF, +1.16% , Microsoft Corp.MSFT, -0.78% and Intuitive Surgical Inc.ISRG, +0.79% were slated to report after the close.

But worries about a potential trade war were hovering after President Donald Trump threatened “tremendous retribution” against the European Union on Wednesday, specifically mentioning auto tariffs, if his meeting with EU officials next week doesn’t yield what he considers a fair auto trade deal.

“With EPS growth exceeding 22% we are obviously heading towards the best earning season in eight years. More interestingly, we started seeing rotation from non-cyclical to cyclical sectors over the past couple of days in a clear sign that investors are willing to take more risk,” said Hussein Sayed, chief market strategist at FXTM, in a note.

“If this earnings momentum continues at its current pace the S&P 500 may take out the record high posted on 26 January; at the moment, the index is just 57 points away from this record,” he added.

Weekly jobless claims are due at 8:30 a.m. Eastern Time, with 224,000 Americans forecast to have filed for unemployment claims last week.

The Philadelphia Fed index for July is also due at 8:30 a.m., followed by leading economic indicators for June at 10 a.m.

Federal Reserve Vice Chairman Randall Quarles will give a speech on alternate reference rates at the New York Fed at 9 a.m. Eastern.

Shares of eBay Inc.EBAY, +0.37% fell 5.9% before the bell after the company late Wednesday reported an earnings beat but issued a lower-than-expected guidance.

IBM Corp. IBM, +0.72% traded 3.1% higher premarket after the tech giant’s earnings out late Wednesday topped Wall Street estimates.

Stocks in Asia closed lower, with European markets SXXP, -0.14% mostly matching the downbeat mood.

U.K. stocks UKX, +0.12% , however, bucked the negative trend after British retail sales data missed expectations and sent the pound GBPUSD, -0.5967% sharply lower.

The ICE U.S. Dollar index DXY, +0.36% climbed 0.3% to 95.353.

Oil prices CLQ8, -1.21% and gold prices GCQ8, -1.03% both slumped, weighed on by the stronger dollar.

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