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Dow Futures Lower Ahead 7-Year Auction; Jobless Claims Below 700,000

Treasury bond yields could be tested today with a $62 billion auction of 7-year notes, with jobless claims dipping below 700,000.

The Thursday Market Minute

  • Global stocks mixed as markets balance rising COVID infections in Europe against the accelerating vaccine rollout in the U.S., with bets on growth and inflation leveling stock performances.
  • Tech stocks muted as Treasury yields edge higher heading into a $62 billion auction of 7-year notes that triggered the last leg lower in bond prices.
  • AstraZeneca re-states data from its north American vaccine trial, noting a 76% overall efficacy rate with 100% protection against the most severe, and fatal, cases of the disease.
  • Oil prices slide as the dollar reaches fresh four-month highs and demand concerns offset the second day of disruption in the Suez canal.
  • CDC data shows 46.4 million Americans have now been fully vaccinated against the coronavirus, with more than 130 million doses administered as of Wednesday.
  • U.S. equity futures suggest a modestly lower open on Wall Street after a near 100,000 decline weekly jobless claims and ahead of a $62 billion 7-year note auction at 1:00 pm.

Wall Street futures slipped lower Thursday ahead of a what could be a key auction of 7-year Treasury notes and an important reading of weekly jobless claims as the market teeters between bets on post-pandemic growth and concerns for near-term inflation. 

Weekly jobless claims fell by 97,000 over the week ending on March 20 to a better-than-expected 684,000, suggesting hiring is starting to accelerate as states begin re-opening as the coronavirus pandemic continues to wane.

Tech stocks look unlikely to power gains into the session following a sharp overnight decline for dual-listed China stocks after the Securities and Exchange Commission began prepping for rule changes that could see them removed from American exchanges. 

The Nasdaq Composite fell more than 2% in yesterday's session, pegging the tech-focused benchmark some 8% south of its all-time closing high on February 12, even as benchmark Treasury bond yields eased to 1.594% following a series of largely successful bond auctions.

Tech's weakness in the face of steady bond yields could provide further evidence of the shift in investor sentiment to so-called 'value stocks' that perform better in a fully-opened economy, a bet that has been fueled by CDC data showing that 46.4 million Americans have been fully vaccinated against the coronavirus and nearly 130 million doses have been administered overall.

Should today's weekly jobless claims figures represent a faster return to work for the more than 9 million Americans on some form of unemployment benefits later today, those value stock bets could accelerate. A poorly-received auction of $62 billion in 7-year notes -- slated for 1:00 pm Eastern time -- could also trigger another leg higher in Treasury yields, adding further pressure to tech stocks and the broader market. 

Stock futures are modestly weaker, however, even after the stronger-than expected data with futures contracts tied to the Dow Jones Industrial Average indicating a 120 point opening bell decline and those linked to the S&P 500 priced for a 13 point move to the downside.

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Nasdaq Composite futures are looking at a 55 point dip start to the trading day, although investors are keeping keen eye on 10-year Treasury note yields, which are edging higher to 1.594% in early New York trading.

Notable pre-market movers Thursday include Rite Aid  (RAD) - Get Rite Aid Corporation Report, which plunged 16.3% after the pharmacy retailer lowered its 2021 earnings and revenue guidance following weaker-than-expected February quarter earnings.

Nike Inc NKE shares slumped 3.5% after the world's biggest sports apparel group was criticized by China's Foreign Ministry for a statement it made about the country's treatment of Uighur Muslims.

GameStop  (GME) - Get GameStop Corporation Report shares were also on the move, rising 10% in pre-market dealing following yesterday's 33.8% collapse that came after the retailer's softer-than-expected holiday quarter earnings and its plans to potentially raise capital through a share offering. 

Oil prices were also in the red, even as the blockage of the Suez Canal, caused by the grounding of the Taiwanese container ship Ever Given, continued into a second day. 

A stronger U.S. dollar, which hit a fresh four-month high of 92.67 against a basket of its global peers overnight, demand concerns and accelerating domestic production were all cited as offsetting factors to the Suez concern as WTI futures retreated $1.32 to $59.86 per barrel.

In Europe, stocks were modestly lower as investors continue to fret over the rise of COVID infections around the region, including in Germany, where the cancellation of the Easter lockdown was followed by data showing new COVID cases rose the most since January 9 yesterday as governments continue to bicker over vaccine shipments. 

In Asia, the SEC's targeting of China-based tech companies listed in the U.S. pulled stocks lower in both Shanghai and Shenzen, with the region-wide MSCI ex-Japan benchmark falling 0.23%, while renewed foreign appetite for Japanese stocks, as well as a weaker yen, helped the Nikkei 225 close 1.14% higher at 28,279.98 points.