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Dow Futures Slide As Jobless Claims, Personal Spending Underscore Coronavirus Weakness

The S&P 500 is on pace for its best April gain since 1974 as big tech earnings, as well as ongoing support from the Fed, continue to boost domestic stocks.

The Thursday Market Minute

  • Global stocks mixed, with Wall Street leading Asia higher and grim GDP data holding down European stocks heading into today's ECB policy meeting.
  • U.S. stocks on pace for their best month in decades amid stronger-than-expected big tech earnings and ongoing pledges of financial support from the Federal Reserve.
  • Facebook and Microsoft top Street revenue forecasts, with Apple and Amazon slated to report after the close of trading today.
  • Weekly jobless claims show another 3.9 million Americans filed for unemployment benefits last week, taking the six week total to nearly 30 million.
  • Wall Street futures suggest a weaker open ahead of earnings from Apple and Amazon after the close of trading today.

U.S. equity futures slumped lower Thursday after data on jobs and spending underscored the impact that COVID-19 continues to have on the world's biggest economy.

Another 3.84 million Americans filed for unemployment benefits last week, the Commerce Department said Thursday, taking the six-week total to just under 30 million. Personal spending, meanwhile, fell 7.5% in March, marking the biggest decline on record as business and restaurants were shuttered at the outbreak of the coronavirus pandemic. Thursday's readings followed data yesterday that indicated the U.S. economy contracted the most since the global financial crisis over the first quarter. 

Global stocks, however, are on pace for their best April on record as investors continued to ride a series of stronger-than-expected earnings from the tech sector and drew confidence from Gilead Science's potential coronavirus treatment breakthrough.

European shares were held down by a gloomy first quarter earnings report from Royal Dutch Shell undefined and the oil major's first dividend cut since the Second World War. Official data from Eurostat also indicated that the Eurozone economy shrank by a larger-than-expected 3.8% over the first quarter, while France's economy suffered its largest contraction since records began in 1949.

Still, with Federal Reserve Chairman Jerome Powell pledging yesterday that the central bank will "continue to use our tools to ensure that the recovery, when it comes, will be as robust as possible", and health officials praising the results of two concurrent tests's for Gilead's  (GILD) - Get Gilead Sciences, Inc. Report nascent coronavirus treatment, remdesivir, U.S. stocks also remain on pace for one of the strongest April rallies in decades.

FAANG earnings, too, have provided solid support over the past week, and continued to do so again in the overnight trading session after Facebook  (FB) - Get Meta Platforms Inc. Class A Report posted stronger-than-forecast quarterly revenues and said it was seeing "signs of stability" in global online advertizing markets. Shares in the group were marked 9.5% higher in pre-market trading at $212.70 each.

Microsoft  (MSFT) - Get Microsoft Corporation Report shares were on the rise, too, gaining 3.5% pre-market after the world's most valuable tech company beat Wall Street forecasts for its top and bottom line as gaming and work-from-home business software during the coronavirus lockdown propelled a 15% rise in group revenues to $35.02 billion.

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Wall Street futures slipped lower, however, after the jobless numbers and ahead of two heavyweight tech earnings -- Apple  (AAPL) - Get Apple Inc. Report and Amazon  (AMZN) - Get, Inc. Report -- after the closing bell.

Contracts tied to the Dow Jones Industrial Average suggest a 225 point decline to start the session, a move that would trim the benchmark's 12.4% month-to-date gain, while those linked to the S&P 500 are indicating a 19 dip to the downside.

 Global oil prices were also on the march, rising for a second consecutive session after the U.S. Energy Department published a smaller-than-expected weekly build in domestic crude inventories and investors parsed reports of a modest uptick in demand as OPEC production cuts are set to begin next week.

Front-month WTI futures contracts -- the new benchmark for U.S. prices that would have owners taking delivery of crude in June -- were last seen $2.34 higher from their Wednesday close in New York and changing hands at $17.40per barrel.

Brent futures for June delivery, which benchmark around 60% of global crude purchases, were marked $2.35 higher at $24.89 per barrel.

European stocks, which are on pace for their best monthly gain since 2009, were modestly lower following the GDP data reading and ahead of today's European Central Bank policy meeting, which will be held virtually from its headquarters in Frankfurt. 

The Stoxx 600 was marked 0.148% lower in mid-morning trade, with Germany's DAX index 0.6% to the downside and Britain's FTSE 100 slipping 1.32%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.05% lower at $99.501 while benchmark 10-year Treasury note yields were holding at 0.612%.

Overnight in Asia, Japan's Nikkei 225 returned from Wednesday's holiday to book a solid 2.14% gain that lifted the benchmark to its highest level -- 20,193.69 points - in eight weeks, while the region-wide MSCI ex-Japan index was seen 1.6% higher heading into the close of trading.