By Anna Hirtenstein 

U.S. stock futures faltered Thursday ahead of the release of weekly unemployment claims data, which will offer fresh indications on the extent of the damage from the coronavirus pandemic on the American labor market.

Futures tied to the S&P 500 were largely flat a day after the benchmark U.S. stock index climbed to a hair's breadth from its first record close since the coronavirus pandemic disrupted the economy. Overseas, the pan-continental Stoxx Europe 600 slipped 0.4%.

Initial jobless claims figures and continuing applications for benefits in the week ended Aug. 7, due at 8:30 a.m. ET, will offer a view into whether the layoffs occurring now are permanent, in contrast to the temporary layoffs and furloughs at the onset of the pandemic. Economists estimate initial unemployment claims fell slightly to 1.1 million last week.

Investors are concerned that the expiration last month of the extra $600 in weekly unemployment benefits is likely to leave less money in workers' pockets and dent consumer spending, becoming a drag on the economy. The pace of change in weekly claims is being closely scrutinized as an indicator of the speed of the economic rebound, said Sebastian Mackay, a multiasset fund manager at Invesco.

"The U.S. labor market has had an enormous shock and is recovering very slowly," Mr. Mackay said. "My base case is a gradual fall in the initial jobless claims. The direction of travel for the economy is recovery, but it's quite slow in the labor market."

Dimming prospects for the quick introduction of a fresh stimulus package are also weighing on investor sentiment. A standoff between lawmakers showed no signs of easing on Wednesday, and negotiations may be stalled until next month. House Speaker Nancy Pelosi said the two sides remain "miles apart," and the Democrats would only resume talks if Republicans agree to spend significantly more than $1 trillion.

Federal Reserve officials on Wednesday once again urged the government to press ahead with additional spending to bolster the economy. San Francisco Fed President Mary Daly said additional relief to state and local governments would be important to prevent deeper cutbacks in services and layoffs of public workers.

The economy may take a bigger hit because of the difficulty some states are encountering in controlling the outbreak, and that may require more government spending, Boston Fed President Eric Rosengren said. The U.S. reported nearly 56,000 new coronavirus cases, the highest daily tally in four days. While the data suggests only about a fifth of states are seeing an increase in cases, some are seeing declines in testing.

Yields on 10-year Treasury notes slipped to 0.664%, from 0.669% at the close on Wednesday, which saw bond investors absorb a $38 billion auction of new 10-year notes. On Thursday, the government is scheduled to offer $26 billion of 30-year bonds at about 1 p.m. ET, wrapping up a week that will see the U.S. raise $112 billion.

In commodities, gold pulled back 0.3% to $1,944.20 a troy ounce as the volatility seen in recent days continued. This week's stint of choppy trading paused a monthslong rally that took the precious metal to an unprecedented high.

"We keep gold because there are still uncertainties, real rates are low, inflation may be higher than expected," said Luc Filip, head of private banking investments at SYZ Private Banking. But the short-term potential for a rally in gold has now reduced, he said. He sold down part of his portfolio's gold holdings two days ago to book profits.

Brent crude, the international benchmark for oil prices, edged down 0.4% to $45.31 a barrel. The International Energy Agency on Thursday projected a deeper rout in oil demand for 2020 than previously forecast because of the high coronavirus case numbers in several major economies.

In Asia, major benchmarks ended the day mixed. The Shanghai Composite Index and Hong Kong's Hang Seng Index both closed almost flat. Japan's Nikkei 225 rose 1.8% after the central bank's producer-price index, which measures manufacturing costs and inflation, came in above expectations for July.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

August 13, 2020 05:39 ET (09:39 GMT)

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