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Dow Futures Gain As Weekly Jobless Claims Drop to 712,000; Dollar Slumps to April 2018 Lows

With new COVID infections rising by nearly 200,000 per day, hiring has slowed and businesses have shuttered heading into the most important weeks of the year for the world's biggest consumer economy.

The Thursday Market Minute

  • Global stocks mixed as focus shifts to U.S. labor markets, stimulus talks following vaccine breakthroughs.
  • Weekly jobless claims are likely to show another 750,000 Americans filing for unemployment benefits, with Friday's November payroll report showing a notable slowdown in new hiring.
  • Los Angeles issues stay-at-home order as California hospitalizations surge, with new infections nearing the 200,000 per day mark around the country. 
  • The U.S. dollar index hits a fresh two-and-a-half year low overnight as investors track stimulus talks in Washington 
  • Oil prices active as OPEC leaders re-start their production talks in Vienna, with U.S. crude holding over $45 per barrel.
  • Wall Street futures point to a modestly softer open ahead of weekly jobless claims data at 8:30 am Eastern time and quarter earnings from Dollar General and Kroger.

U.S. equity futures edged higher Thursday, while the dollar slumped to a fresh two-and-a-half year low, as investors focused on labor market weakness and stimulus talks amid a renewed acceleration in domestic coronavirus infections. 

Weekly jobless claims showed another 712,000 Americans filed for unemployment benefits over the final days of last month, echoing the 4.2 million monthly rise in COVID infections that contributed to 35,000 deaths, the highest tallies of any country in the world. Continuing claims were also lower, at 5.52 million.

Wednesday, in fact, was the deadliest day for Covid-19 fatalities, with more than 2,700 Americans dying from the disease, according to Johns Hopkins University. The number of Covid-19 patients in U.S. hospitals topped 100,000 for the first time.

A weaker-than-expected reading of private sector employment from ADP yesterday, which showed a net November gain of 307,000, as well as a softer employment component of the ISM Manufacturing sector PMI survey have added to investor concerns of a noted fourth quarter slowdown and heightened the need for a new round of stimulus from Washington.

Talks that have revived co-operation among Congressional lawmakers, who have claimed to agreed a bi-partisan bill worth $908 billion, have allowed for some positive equity sentiment, but the broader market reaction to deeper spending and extended interest rate and balance sheet support from the Federal Reserve are far move evident on bond and currency markets.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.35% lower at 90.779, an April 2018 low. Benchmark 10-year Treasury note yields, meanwhile, inched close to the 1% threshold, trading at 0.943%, amid upward moves in government bond yields around the world. 

Equity futures, meanwhile, were mostly muted in the overnight session, and are suggesting a mixed start to the Thursday trading day, with both the weekly jobless claims numbers, and tomorrow's official November non-farm payroll report, firmly in focus.

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Contracts tied to the Dow Jones Industrial Average, which is up 4.7% for the year, are priced for a modest 15 point gain while those linked to the S&P 500, which has gained 13.6%, are indicating a 0.25 point bump.

The Nasdaq, however, is set to add around 35 points to its year-to-date advance of 42.6%.

European stocks were weaker, as well, despite this week's historic vaccine approval in the United Kingdom, and hopes of a breakthrough in the year-long Brexit trade talks between London and Brussels ahead of Britain's formal exit from the bloc in January.

The Stoxx 600 benchmark, the region's broadest measure of share prices, was marked 0.1% lower in Frankfurt while Britain's FTSE 100 added 0.1% even as the pound jumped to 1.3450 in mid-morning trading in London. 

Oil markets are also likely to be active Thursday as OPEC leaders, as well as non-member allies such as Russia, re-start their virtual meeting at 8:00 am Eastern time in Vienna. 

The cartel remains divided on whether to continue to hold back 7.7 million barrels per day in collective production, or trim that agreed output cut to around 5.8 billion per day -- a reduction worth around 2% of global supply -- at the start of next year.

WTI crude futures contracts for January delivery, the U.S. benchmark, traded 38 cents lower from their Wednesday close in New York and were changing hands at $44.90 per barrel in early European dealing, while Brent contracts for February delivery, the new global benchmark, fell 35 cents to $47.90 per barrel.

Overnight in Asia, last night's closing rally on Wall Street helped regional stocks record modest Thursday gains, even as the overall risk appetite faded amid the rise in U.S. infections and the labor market weakness. 

The region-wide MSCI ex-Japan index was marked 0.7% higher heading into the final hours of trading, while the Nikkei 225 in Tokyo ended the session little-changed from its 29-and-a-half year high at 26,809.37 points.