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U.S. Stocks May Give Back Ground On Disappointing Jobs Data

wallstreet july20 16jul20 lt

After ending the previous session mostly higher, stocks may give back some ground 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 200 points.

Traders may cash in on recent strength in the markets after data from the Labor Department showed the pullback in first-time claims for unemployment benefits nearly ground to a halt last week.

The Labor Department said initial jobless claims slipped to 1.300 million in the week ended July 11th, a decrease of just 10,000 from the previous week's revised level 1.310 million.

Economists had expected jobless claims to drop to 1.250 million from the 1.314 million originally reported for the previous week.

Jobless claims fell for the fifteenth consecutive week, although the pace of decline has slowed considerably from April and May.

While a separate report from the Commerce Department showed another substantial increase in retail sales in the month of June, the data may be seen as old news as some states roll back their reopening plans due to a surge in coronavirus cases.

The report said retail sales soared by 7.5 percent in June after skyrocketing by an upwardly revised 18.2 percent in May.

Economists had expected retail sales to jump by 5.0 percent compared to the 17.7 percent spike originally reported for the previous month.

Excluding sales by motor vehicles and parts dealers, retail sales still shot up by 7.3 percent in May after soaring by 12.1 percent in May. Ex-auto sales were also expected to surge up by 5.0 percent.

The Federal Reserve Bank of Philadelphia also released a report showing a modest slowdown in the pace of growth in regional manufacturing activity in the month of July.

On the earnings front, shares of Bank of America (BAC) are moving significantly lower in pre-market trading after the financial giant reported better than expected second quarter earnings but also set aside another $4 billion for coronavirus-related loan losses.

Healthcare giant Johnson & Johnson (JNJ) is also seeing modest pre-market weakness despite reporting second quarter results that exceeded analyst estimates and raising its full-year guidance.

Shares of Morgan Stanley (MS) may also be in focus after the investment firm reported better than expected second quarter results.

Shortly after the start of trading, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of July. The housing market index is expected to rise to 60 in July after spiking to 58 in June.

The Commerce Department is also due to release its report on business inventories in the month of May. Business inventories are expected to slump by 2.3 percent.

Stocks fluctuated over the course of the trading session on Wednesday but largely maintained a positive bias before ending the day mostly higher. Adding to the strong gains posted in the previous session, the Dow and the S&P 500 finished the day at their best closing levels in over a month.

The major averages finished the day firmly positive but well off their early highs. The Dow advanced 227.51 points or 0.9 percent to 26,870.10, the Nasdaq rose 61.92 points or 0.6 percent to 10,550.49 and the S&P 500 climbed 29.04 points or 0.9 percent to 3,226.56.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index slid by 0.8 percent, while China's Shanghai Composite Index plunged by 4.5 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.4 percent, the German DAX Index and the French CAC 40 Index are down by 0.6 percent and 0.7 percent, respectively.

In commodities trading, crude oil futures are falling $0.48 to $40.72 a barrel after jumping $0.91 to $41.20 a barrel on Wednesday. Meanwhile, after inching up $0.40 to $1,813.80 an ounce in the previous session, gold futures are sliding $6.10 to $1,807.70 an ounce.

On the currency front, the U.S. dollar is trading at 107.14 yen versus the 106.94 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.419 compared to yesterday's $1.412.

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