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U.S. Stocks May See Further Downside After Yesterday's Sell-Off

wallstreet nov01 25jun20 lt

Following the sell-off seen in the previous session, stocks are likely to see further downside in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 225 points.

Renewed concerns about a spike in coronavirus cases may continue to weigh on the markets after California, Texas and Florida all reported their biggest single-day increases in cases.

According to a tally by NBC News, the U.S. saw a record 45,557 reported Wednesday, surpassing the peak seen during the first wave of the coronavirus on April 26th.

The renewed surge in coronavirus cases in Southern and Western states has partly offset investor optimism about a quick economic recovery, which has helped prop up the markets in recent weeks.

Traders may be worried about the possibility of states reimposing restrictions on businesses, although the Trump administration has ruled out another lockdown.

Adding to the negative sentiment, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by much less than expected in the week ended June 20th.

The report said initial jobless claims dropped to 1.480 million, a decrease of 60,000 from the previous week's revised level of 1.540 million.

Economists had expected jobless claims to tumble to 1.300 million from the 1.508 million originally reported for the previous week.

Jobless claims pulled back further off the record high of 6.867 million set in late March, although the pace of decline has slowed considerably in the past two weeks.

Meanwhile, the Commerce Department released a separate report showing a substantial rebound in durable goods orders in the month of May.

The Commerce Department said durable goods orders spiked by 15.8 percent in May after plunging by a revised 18.1 percent in April.

Economists had expected durable goods orders to surge up by 10.9 percent compared to the 17.7 percent nosedive that had been reported for the previous month.

Excluding a significant rebound in orders for transportation equipment, durable goods orders jumped by 4.0 percent in May after tumbling by 8.2 percent in April. Economists had expected a 2.5 percent increase.

Stocks moved sharply lower over the course of the trading day on Wednesday, more than offsetting the upward move seen over the two previous sessions. The tech-heavy Nasdaq pulled back well off Tuesday's record closing high.

The major averages climbed off their worst levels of the day but still posted steep losses. The Dow plummeted 710.16 points or 2.7 percent to 25,445.94, the Nasdaq tumbled 222.20 points or 2.2 percent to 9,909.17 and the S&P 500 plunged 80.96 points or 2.6 percent to 3,050.33.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index tumbled by 1.2 percent, while Australia's S&P/ASX 200 Index plummeted by 2.5 percent.

The major European markets have shown more modest moves to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.5 percent, the German DAX Index has edged down by 0.1 percent and the French CAC 40 Index is just below the unchanged line.

In commodities trading, crude oil futures are sliding $0.86 to $37.15 a barrel after plunging $2.36 to $38.01 a barrel on Wednesday. Meanwhile, after falling $6.90 to $1,775.10 an ounce in the previous session, gold futures are declining $6.90 to $1,768.20 an ounce.

On the currency front, the U.S. dollar is trading at 107.37 yen versus the 107.04 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1204 compared to yesterday's $1.1251.

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