Dow Futures Slip Lower With Congressional Stimulus Talks In Focus: Weekly Jobless Claims Fall to 1.19 Million

Stock markets will likely key on weekly unemployment claims numbers this morning after a weaker-than-expected reading of private sector job creation from ADP yesterday and softer hiring data in an otherwise solid July ISM report.

The Thursday Market Minute

  • Global stocks mixed as investors brace for two key readings on the U.S. jobs market today and Friday and look to Congress for a breakthrough on fresh stimulus.
  • Lawmakers remain deadlocked in talks to replace last week's expired $600 emergency unemployment benefit, with Democrats and Republicans still trillions of dollars apart on their respective plans.
  • Weekly jobless data shows 1.19 million Americans filed for unemployment benefits over the week ending on July 25, the 21st consecutive week where applications topped 1 million.
  • Gold prices hits a fresh all-time high of $2.058.32 per ounce while the dollar bumps from its two-year low in mixed overnight trading on foreign exchange markets.
  • U.S. equity futures suggest a mixed open on Wall Street ahead of earnings from Bristol Myers before the start of trading.

U.S. equity futures traded lower Thursday, while the dollar hovered near a two-year low and gold hit new record highs, as investors braced for fresh jobs data and looked for a breakthrough from stimulus talks in Washington.

Stocks pared declines, however, after a better-than-expected weekly reading of unemployment applications, which fell to 1.186 million over the week ending on July 25.

Democrat and Republican lawmakers are set to continue their week-long negotiations in the nation's capital Thursday, but remain trillions of dollars apart on their respective coronavirus rescue plans as Americans look for financial support following the expiration of emergency unemployment benefits last Friday.

The $600 payment, which collectively pumped around $18 billion a week into the U.S. economy, kept many Americans from having to add to record high personal borrowing rates and could be key to any second half recovery.

That was made clear yesterday when payroll processing group ADP's reading of private sector job creation showed a much-weaker-than-expected topline figure of 167,000, more than 1.2 million south of the Street consensus forecast. 

An otherwise solid reading of non-manufacturing activity for last month -- which showed the biggest jump in new orders on record -- also included softer higher in the biggest sector of the U.S. economy, putting renewed focus on today's weekly jobless claims and Friday's July non-farm payroll report at 8:30 am Eastern time.

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House Speaker Nancy Pelosi told reporters in Washington that she was "optimistic that there is a light at the end of the tunnel" with respect to negotiations with her Republican rivals, but noted that "how long that tunnel is remains to be seen."

U.S. stocks look set to trade cautiously until that time frame is clarified, futures contracts suggest, with those tied to the Dow Jones Industrial Average suggest a 45 point dip while those linked to the S&P 500 are indicating an 8 point pullback.

Benchmark 10-year U.S. Treasury bond yields were last seen trading modestly lower at 0.52% while the U.S. dollar index, which tracks the greenback against a basket of six global currencies, edged 0.08% higher to trade at 92.95. Gold, meanwhile, held near its all-time high at $2,058.32 after breaching the $2,000 per ounce mark earlier this week.

A bigger-than-expected 7.4 million barrel decline in domestic U.S. crude stocks, published yesterday by the Energy Department, was offset by data showing the highest levels of gasoline inventories in nearly four decades, suggesting demand waned considerably over the summer driving period, putting pressure on global oil prices in the overnight session.

WTI contracts for September delivery, the U.S. benchmark, 48 lower from their Wednesday close in New York and were changing hands at $41.68 per barrel in early European dealing while Brent contracts for October, the new global benchmark, were seen 25 cents lower at $44.92 per barrel.

In global stock markets, European shares trended lower, with the Stoxx 600 falling 0.9% and Britain's FTSE 100 slumping 1.9% after today's Bank of England rate decision at 7:00 am London time, which made no changes to the central banks key policy rates but forecast a slower-than-expected recovery for the region's third-largest economy.

Overnight in Asia, the softening U.S. jobs data, as well as the deadlock on fresh stimulus from Congress, kept the Nikkei 225 in the red despite stronger-than-expected quarter earnings from Toyota, the world's biggest carmaker, while the region-wide MSCI ex-Japan index bumped 0.3% higher into the final hours of trading.