Stock Futures Push Toward All-Time High Thanks to Encouraging Earnings Report

Stock futures look optimistic Friday morning as analysts react to better-than-expected Q3 earnings reports. Bitcoin slips back under its all-time high price, however, fueling concerns in the crypto space.

Companies posted better earnings in the third quarter than some investors expected, leading to a banner day for stock futures on Thursday. The blue-chip index closed close to its all-time high Thursday afternoon, while Dow futures surged. Positive news regarding unemployment has also bolstered investor enthusiasm. A recent report shows employment approaching its healthiest level since March of 2020.

The jobs report was released Thursday by the Department of Labor. New jobless claims were down to just 290,000 for the week, lower than the projected 297,000. Continuing jobless claims were down to 2.481 million against an expected 2.548 million.

This positive news contrasted with Bitcoin’s ongoing roller coaster of value. Official trading of the first Bitcoin ETF, ProShares’ BITO, started on Tuesday. This exchange-traded fund helped the digital currency to push up past its previous all-time high. The coin was briefly $67,016 on Wednesday before falling back to settle at $62,724 by Friday morning. Investors seem divided on Bitcoin’s potential for long-term success, resulting in its volatile price.

Stock Futures Look Bright

Stock futures continue to impress Friday morning. Both the S&P 500 and Dow indexes are near their record highs, and some analysts believe that market uncertainty will dissipate soon. Fund managers are now eyeing the third-quarter earnings reports from companies like Apple, Facebook, and Amazon. If the tech sector posts a better-than-expected quarter, the markets are likely to rise even higher.

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It’s not all good news, though. Some shares are still shaky even in the face of rising futures contacts. Chipotle’s stock is mixed Friday morning despite positive sales numbers. A lack of confidence in the retail food sector currently stems from staffing concerns.

Shares of Snap, the company that owns Snapchat, fell Friday morning. The social media company has been negatively impacted by recent changes to Apple’s iOS operating system. In a nutshell, Apple has made it more difficult for apps to track user activity without iPhone owners’ direct authorization. Snap’s earnings for the third quarter also fell below expectations, sinking some investor enthusiasm.

Logistics Challenges

The market is still warily eyeing shipping constraints and manufacturing delays. Shares of logistics companies have soared thanks to record-high shipping fees for cargo containers. Those high fees could threaten to eat into profit margins for companies that sell consumer goods, though. Likewise, shipping constraints could add further inflationary pressure to the US market. Since rising shipping fees need to be offset somewhere in the supply chain, analysts expect to see consumer good prices rise.

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An ongoing microchip shortage is another challenge facing the supply chain. Chips that are used in electronics like computers, cell phones, and video game consoles are in short supply and in high demand. These materials are difficult to manufacture, meaning that the bottleneck could continue for years.

This strained supply has led to the shares of graphics card company Intel falling Friday morning. Recently, Intel confirmed that its margins were going to be slimmer for the foreseeable future as a direct result of manufacturing woes.

Bitcoin ETF Sends Mixed Signals

Elsewhere in the markets, Bitcoin has struggled to carve out a coherent narrative. As recently as Wednesday, the crypto standard seemed ascendant. Now, things are a bit more complicated. “Will the launch of BITO by itself bring significantly more fresh capital into bitcoin? We doubt it given the multitude of investment choices bitcoin investors already have,” JPMorgan analysts wrote in a public note on Thursday.

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“The bulls are seeing this ETF as a new investment vehicle that would open the avenue for fresh capital to enter bitcoin markets. The bears are seeing the new ETF as an only incremental addition to an already crowded space of bitcoin investment vehicles.”

Other commentators have also pointed out that resistance to crypto prices could come from a more practical standpoint. Bitcoin’s mining and verifications processes chew through considerable amounts of electricity. Countries that are already facing issues in producing energy might push back on the presence of Bitcoin miners within their borders.

Already, China’s government has issued an outright ban on cryptocurrency. Enforcement of the ban in late summer was reportedly intended to address some province’s electricity shortfalls. Bitcoin enthusiasts have argued that concerns about crypto’s energy consumption are overstated. They instead point to industrial manufacturing as the sector that needs to reduce its energy use.

Hedging Against Inflation

Crypto enthusiasts are quick to point out that bitcoin shares its status as an inflation hedge with investments like gold. Bitcoin’s wins in October can be attributed, at least in part, to lingering fears of a devalued dollar. The price of gold continues to rise steadily Friday morning, which is potential evidence that bears are already taking steps to safeguard their assets.

Historically, as the value of government-backed currency drops, investors shuffle their money into commodities with a limited supply and a proven record of retaining their value.

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