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U.S. Stocks Finish Lackluster Session Mixed Ahead Of Jobs Report

wallstreet july17 04jun20 lt

Following the strong upward move seen over the past several sessions, stocks turned in a relatively lackluster performance during trading on Thursday before eventually ending the day mixed.

While the Dow inched up 11.93 points or 0.1 percent to a three-month closing high of 26,281.82, the Nasdaq slid 67.10 points or 0.7 percent to 9,615.81 and the S&P 500 fell 10.52 points or 0.3 percent to 3,112.35.

The choppy trading on Wall Street came as traders took a breath to digest the recent strength on Wall Street, which lifted the Nasdaq-100 to a record intraday high in early trading.

Traders also seemed reluctant to make more significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

Economists currently expect employment to tumble by about 8.0 million jobs in May after plunging by 20.5 million jobs in April. The unemployment rate is expected to jump to 19.8 percent from 14.7 percent.

The Labor Department released a report this morning showing the pace of decline in first-time claims for unemployment benefits has begun to stall a bit.

The report showed initial jobless claims tumbled to 1.877 million in the week ended May 30th, a decrease of 249,000 from the previous week's revised level of 2.126 million.

However, economists had expected jobless claims to slump to 1.800 million from the 2.123 million originally reported for the previous week.

Jobless claims pulled back further off the record high of 6.867 million set in the week ended March 28th, although the number of new claims since the coronavirus lockdowns now exceeds 42.6 million.

The report also showed an unexpected increase in continuing claims, a reading on the number of people receiving ongoing unemployment assistance, which jumped by 649,000 to 21.487 million in the week ended May 23rd.

Despite the weekly increase, economists at Oxford Economics noted continuing claims remain below their peak, suggesting "a small amount of rehiring may be starting to take place."

Earlier in the day, some buying interest was generated in reaction to the European Central Bank announcing additional stimulus to deal with the economic fallout from the coronavirus pandemic.

The ECB announced that it will increase its Pandemic Emergency Purchase Programme by 600 billion euros. The bank announced plans to purchase 750 billion euros of government bonds back in March.

Sector News

Interest rate-sensitive utilities stocks showed a significant move to the downside as treasury yields extended the jump seen in the previous session.

Reflecting the weakness in the sector, the Dow Jones Utility Average slumped by 2.1 percent after ending Wednesday's trading at its best closing level in nearly three months.

Software, networking and biotechnology stocks also saw considerable weakness, weighing on the tech-heavy Nasdaq, while housing stocks also moved notably lower.

On the other hand, banking stocks extended the rally seen in the previous session, driving the KBW Bank Index up by 4 percent to a three-month closing high.

Substantial strength was also visible among oil service stocks, as reflected by the 3.9 percent jump by the Philadelphia Oil Service Index. The strength in the sector came as the price of crude oil for July delivery inched up $0.12 to $37.41 a barrel.

Brokerage, steel, and gold stocks also turned in strong performances on the day, offsetting the weakness seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although China's Shanghai Composite Index bucked the uptrend and edged down by 0.1 percent. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index rose by 0.4 percent and 0.2 percent, respectively.

Meanwhile, the major European markets moved to the downside on the day. While the French CAC 40 Index dipped by 0.2 percent, the German DAX Index and the U.K.'s FTSE 100 Index fell 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries extended the significant decrease seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.9 basis points to 0.820 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Labor Department's closely watched monthly employment report for May.

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