Global stock market futures fell into negative territory this morning as crude oil prices rose 2 percent. The decline in equities coincided with heightened tensions in the oil market, driven by drone attacks on infrastructure in Saudi Arabia and Russia, as well as continued attacks on tankers in the Strait of Hormuz. These events pushed the price of West Texas Intermediate (WTI) crude to $99 per barrel and Brent crude to $112 per barrel, marking a five-month high for the latter benchmark. This development occurred within two weeks of the U.S. midterm elections.
Pre-market trading showed broad losses across major indices. The Dow Jones Industrial Average dropped 285 points, while the S&P 500 fell 69 points and the Nasdaq Composite lost 479 points. The Russell 2000, a gauge of small-cap stocks, was down 16 points. Bond yields also moved higher, with the 10-year yield at 5.038%, the 2-year yield at 4.731%, and the 30-year yield at 5.353%. Analysts noted that a simultaneous downturn in pre-market equities and bond yields is a rare occurrence.
Labor market data released Thursday indicated strong job retention. Initial Jobless Claims came in at 194,000, the lowest single-week total since mid-July and the sixth consecutive week below 200,000. However, commentary suggested these figures do not fully reflect a flat labor market over the past two and a half years. Continuing Claims rose to 1.728 million from a downwardly revised 1.703 million the prior week, marking six straight weeks below 1.73 million. This level remains more than a quarter of a million higher than the threshold that typically causes economic concern.
Corporate earnings reports from Procter & Gamble, Lockheed Martin, Spotify, and Valero Energy provided mixed signals for investors. Procter & Gamble reported first-quarter fiscal earnings of $2.00 per share, exceeding the Zacks consensus estimate of $1.89 and the year-ago quarter by one cent. Revenue grew 2.5 percent to $23.28 billion, beating expectations, and shares rose 2.46 percent in early trading.
Lockheed Martin topped third-quarter earnings estimates by reporting $7.97 per share against a projected $7.49, a surprise of 6.4 percent. Revenue also beat expectations by 1.35 percent at $20.71 billion. The stock gained 5 percent in pre-market trading, extending its year-to-date gain to 14 percent.
Spotify missed its earnings estimate by 8 percent, reporting $2.85 per share compared to the projected $3.10. Despite the shortfall, the company posted record gross margins of 33 percent and saw premium subscriptions rise to 6 million in the quarter. Shares traded 7.5 percent higher at that hour.
Valero Energy benefited from strength in the oil refining market, reporting a 12.3 percent earnings surprise at $23.90 per share for the third quarter. Revenue surged 23.3 percent above the Zacks consensus to $46.1 billion. Shares added another 1.6 percent to their year-to-date gain of 168 percent.