The major U.S. index futures are currently pointing to a modestly lower open on Thursday, with stocks likely to give back ground following the strong upward move seen over the course of the previous session.

Profit taking may contribute to an initial pullback on Wall Street, as some traders look to cash in on the recent strength in the markets.

The advance seen during Wednesday’s session lifted the Dow and S&P 500 to new record closing highs, while the Nasdaq reached its best closing level in two years.

The S&P 500 reached an intraday peak just of the 5,000 level, which could prove to be a psychological resistance for the broad market index.

The futures did not show much reaction to a Labor Department report showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended February 3rd.

The report said initial jobless claims slipped to 218,000, a decrease of 9,000 from the previous week’s upwardly revised level of 227,000.

Economists had expected jobless claims to edge down to 220,000 from the 224,000 originally reported for the previous week.

Among individual stocks, entertainment giant Disney (NYSE:DIS) is likely to see initial strength after reporting better than expected fiscal first quarter earnings, boosting its dividend and providing an upbeat forecast.

After ending Tuesday’s choppy trading session modestly higher, stocks showed a strong move to the upside during trading on Wednesday. The Dow and the S&P 500 set new record closing highs, with the latter reaching an intraday peak just shy of 5,000.

The major averages pulled back off their best levels going into the close but remained firmly positive. The S&P 500 climbed 40.83 points or 0.8 percent to4,995.06 and the Dow rose 156.00 points or 0.4 percent to 38,677.36, while the tech-heavy Nasdaq jumped 147.65 points or 1.0 percent to 15,756.64.

The strength on Wall Street may partly have reflected recent upward momentum, which helped stocks rally late last week despite waning optimism about the Federal Reserve cutting interest rates in March.

While CME Group’s FedWatch Tool suggests the chances of March rate cut are just 18.5 percent, the Fed is still expected to begin lowering rates sometime in the coming months.

Recent upbeat economic data has seemingly reduced the likelihood of a near-term rate cut but a strong economy is still seen as a net positive for stocks.

A positive reaction to some of the latest earnings news also contributed to notable advance seen over the course of the session.

Share of Enphase Energy (NASDAQ:ENPH) soared by 16.9 percent after the solar inverter maker reported weaker than expected fourth quarter revenues but said it expects demand to improve throughout 2024.

Auto giant Ford (NYSE:F) also surged by 6.1 percent after reporting better than expected fourth quarter results, providing upbeat guidance for 2024 and announcing a supplemental dividend of 18 cents per share.

On the other hand, shares of Snap (NYSE:SNAP) plummeted by 34.6 percent after the Snapchat parent reported mixed fourth quarter results and forecast first quarter sales below analyst estimates.

“We’re hip deep in company earnings and so far investors have been somewhat relieved that for the most part the news has been pretty positive in a season that had a big question mark hanging over it,” said Danni Hewson, head of financial analysis at AJ Bell.

In U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened in the month of December.

The Commerce Department said the trade deficit increased to $62.2 billion in December from a revised $61.9 billion in November.

Economists had expected the trade deficit to narrow to $62.2 billion from the $63.2 billion originally reported for the previous month.

Software stocks turned in some of the market’s best performances on the day, driving the Dow Jones U.S. Software Index up by 1.9 percent to a record closing high.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Semiconductor Index.

Steel and housing stocks also saw considerable strength, while biotechnology stocks showed a notable move to the downside.

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