US markets on track for small gains ahead of more earnings

Wall Street was pointed toward gains early Thursday as investors awaited more corporate earnings reports for clues about how companies and consumers are handling persistent, four-decade high inflation.

Futures for the Dow Jones Industrial Average were up 0.3% and futures for the S&P; 500 gained less than 0.1%.

After big gains to start the week, Wall Street pulled back as investors reviewed earnings and Treasury yields climbed to multiyear highs.

“Rising U.S. yields and the strong U.S. dollar are the sledgehammers pounding global equities lower,” said Stephen Innes of SPI Asset Management in a report.

The yield on the 10-year Treasury, which influences mortgage rates, climbed to 4.13%, its highest level since June 2008. It was at 4.02% late Tuesday.

The yield on the two-year Treasury, which responds to expectations of future Fed action, rose to 4.58% from 4.43%.

The Fed and central banks in Europe and Asia have been raising interest rates to cool inflation that is at multi-decade highs. Investors worry they might tip the global economy into recession.

Inflation in Britain hit a 40-year high of 10.1% over a year earlier in September.

Markets in Europe and Asia were mixed as the British prime minister faced demands to quit and Japan reported its 14th straight monthly trade deficit.

British Prime Minister Liz Truss faced demands to resign following chaotic scenes in Parliament during a vote on a fracking ban. Truss has been defiant despite financial market turmoil caused by multiple policy U-turns.

Truss “precipitated this political crisis by triggering the market crisis,” said Michael Every of Rabobank in a report. Britain is “deep in an emerging-market rut.”

At midday, the FTSE 100 in London was up 0.1%, the DAX in Frankfurt fell 0.3% and CAC 40 in Paris rose 0.4%.

In Asia, the Nikkei 225 in Tokyo tumbled 0.9% to 27,006.96 after September imports ballooned 46% over a year earlier due to a surging oil prices and a weak yen. The Japanese currency is trading at a 32-year low against the dollar.

The yen gained slightly on the dollar, to 149.79 from Wednesday’s 149.81 yen.

The dollar has gained against other currencies following repeated interest rate hikes by the Federal Reserve, which increases the return on assets valued in dollars. Investors also see the U.S. currency as a stable haven amid global uncertainty.

The Shanghai Composite Index lost 0.3% to 3,035.05 and the Hang Seng in Hong Kong fell 1.4% to 16,280.22.

The Kospi in Seoul retreated 0.9% to 2,218.09 and Sydney’s S&P-ASX; 200 sank 1% to 6,730.70.

American Airlines jumped 2.4% in premarket after the company reported profit of $483 million in the third quarter, as revenue during a hectic summer travel season topped pre-pandemic levels.

CEO Robert Isom said demand for travel remains strong, and American forecast that fourth-quarter earnings will top Wall Street expectations and revenue will again exceed the same quarter of 2019.

In energy markets, benchmark U.S. crude rose $1.95 to $87.50 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, advanced $1.51 to $93.92 per barrel in London.

The euro gained to 98.08 cents from Wednesday’s 97.68 cents.

On Wednesday, the S&P; fell 0.7%, breaking two days of gains. The Dow slipped 0.3% and the Nasdaq composite sank 0.9%.

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Kurtenbach reported from Bangkok; Ott reported from Washington.

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