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The S&P 500 index was set to open lower on Thursday after the resignation of Liz Truss as prime minister of the UK added a layer of uncertainty to markets struggling to hold on to gains from a set of positive earnings forecasts from U.S. companies.
Truss' economic program
Truss' economic program had sent shockwaves through global financial markets and divided her Conservative Party just six weeks after she was appointed. A leadership election will be completed within the next week.
"There's kind of renewed concern that there is fresh political instability and what investors really are craving is some kind of stability," said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
Earlier in the session, positive forecasts from IBM Corp and AT&T Inc helped offset declines from Tesla Inc, which dropped 6.2 per cent in premarket trading as the company flagged persistent logistics challenges, with fourth-quarter deliveries growing by less than the aimed 50 per cent.
IBM shares jumped 4.7 per cent, leading the advance among Dow components after the software and IT services company beat quarterly earnings estimates on Wednesday and said it expects to exceed full-year revenue growth targets.
Fellow blue-chip stock Verizon Communications Inc shares added 0.9 per cent after peer wireless carrier AT&T added 3.7 per cent upon raising its annual profit forecast.
The positive updates from companies come after upbeat results from big U.S. banks, Netflix Inc, Procter & Gamble Co and Travelers Companies Inc prompted analysts to raise third-quarter profit growth expectations for S&P 500 companies to 3 per cent from 2.8 per cent, according to Refinitiv data.
However, the estimate is still sharply lower than an 11.1 per cent increase that was forecast at the start of July.
"With the small set of companies that have reported earnings so far, we're seeing majority of them beat profit estimates and I would very much put that in the 'better-than-feared' category," said Art Hogan, chief market strategist at B. Riley Wealth in New York.
The main US indexes have been hammered by fears of aggressive interest rate hikes by the Federal Reserve in recent months, with Treasury yields climbing to multi-year highs amid no real signs of US inflation slowing.
The US central bank is expected to deliver its fourth straight 75 basis-point hikes in its November meeting, with some even pricing in a full percentage point raise. At 8:55 am ET, Dow e-minis were up 19 points, or 0.06 per cent, S&P 500 e-minis were down 5.75 points, or 0.16 per cent, and Nasdaq 100 e-minis were down 39.25 points, or 0.35 per cent.
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