US pre-open: Stocks seen little changed as investors pause for breath

US futures pointed to a broadly flat open on Wall Street, with investors expected to pause for breath following two sessions of gains, despite Brent crude breaching the $50 a barrel level for the first time since November.

At 1125 BST, Dow Jones Industrial Average and Nasdaq futures were up 0.1%, while S&P 500 futures were unchanged.

On Wednesday, stocks in the US ended with healthy gains, with the Dow up 0.8% and the S&P 500 and Nasdaq both 0.7% higher as big bank stocks and rising oil and house prices overrode a slowdown in the service sector.

Oil prices advanced after data from the Energy Information Administration said on Wednesday that US crude supplies declined by 4.2m barrels for the week ended 20 May, compared with expectations of a 2.5m drop.

West Texas Intermediate was up 0.6% to $49.86 a barrel while Brent crude was 0.7% firmer at $50.10.

“US stock index futures are relatively subdued in this morning’s European session,” said David Morrison, senior market strategist at SpreadCo.

“The major indices appear to be consolidating following two explosive sessions which have both seen triple digit gains for the Dow. The sharp move higher has taken many investors by surprise given the recent hawkish comments from Fed members which have raised the probabilities of a summer rate hike.”

Morrison said the equity rally was due in part to increased confidence in the US economy and hopes that it is strong enough to withstand further monetary tightening.

“However, all eyes are on the dollar now. If the greenback continues its recent rally this will put pressure on China and increase the possibility of a yuan devaluation. It should also put downside pressure on dollar-denominated commodities. But for now all seems well – particularly with near-month Brent crude back above $50 per barrel.”

In corporate news, earnings are due from Abercrombie & Fitch, Signet Jewelers and Dollar General Corp.

On the data front, US durable goods orders and initial jobless claims are at 1330 BST, while pending home sales are due for release at 1500 BST.