U.S. Stock Futures Wobble Ahead of Jobless Claims
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
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
"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
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
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
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
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 firstname.lastname@example.org
(END) Dow Jones Newswires
August 13, 2020 05:39 ET (09:39 GMT)
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