Jobless Benefits, Cisco, Oil Prices - 5 Things You Must Know Thursday

Stock futures are lower; economists expect 2.5 million Americans to have applied for unemployment benefits in the latest week; Cisco beats earnings estimates.

Here are five things you must know for Thursday, May 14:

1. -- Stock Futures Suggest a Lower Start for Wall Street

Stock futures pointed to a weaker start for Wall Street Thursday after Federal Reserve Chairman Jerome Powell warned that without more government spending the economic downturn in the U.S. could leave lasting damage.

Investors also awaited the latest data on U.S. jobless claims.

Contracts linked to the Dow Jones Industrial Average fell 101 points, futures for the S&P 500 slipped 9 points and Nasdaq futures were down 25 points.

Stocks declined for a second straight session Wednesday after Powell warned the U.S. economy's "path ahead is both highly uncertain and subject to significant downside risks."

“Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” the Fed chief said.

Fears of how long it will take the U.S. to recover from shutdowns related to the coronavirus pandemic sent the Dow down 545 points, or 2.29%, to 23,219, the S&P 500 down 2.07% and the Nasdaq lower by 2.19%.

2. -- Another 2.5 Million Americans Expected to File for Unemployment

Economists expect 2.5 million Americans to have applied for unemployment benefits in the week ended May 9, vs. 3.2 million in the previous week. 

The latest jobless data will be released at 8:30 a.m. ET. 

A record 33 million new claims have been filed over the past seven weeks during the coronavirus pandemic that has shut the U.S. economy and put a staggering number of Americans out of work.

The economic calendar Thursday also includes import and export prices for April at 8:30 a.m.

Earnings reports are expected Thursday from Applied Materials  (AMAT) - Get Report, Norwegian Cruise Line  (NCLH) - Get Report, Aurora Cannabis  (ACB) - Get Report, Denny's  (DENN) - Get Report, Melco Resorts  (MLCO) - Get Report and Brookfield Asset Management  (BAM) - Get Report.

3. -- Cisco Rises on Earnings Beat

Shares of Cisco Systems  (CSCO) - Get Report were higher in premarket trading Thursday after the networking equipment and software giant posted fiscal third-quarter profit and sales that beat Wall Street estimates. 

Cisco earned an adjusted 79 cents a share in the quarter on revenue of $12 billion, down 8% from a year earlier.

Analysts were expecting Cisco to report earnings of 71 cents a share on revenue of $11.88 billion.

The stock rose 2.6% to $43.04 in premarket trading.

"We executed well in Q3 in a very challenging environment, delivering strong margins and non-GAAP EPS growth," said Chief Financial Officer Kelly Kramer in a statement.

For the fourth quarter, Cisco said it expects revenue to fall 8.5% to 11.5% from a year earlier and earnings to come in between 72 cents and 74 cents a share. Analysts forecast profit of 71 cents a share.

Cisco said software subscriptions now make up 74% of its software revenue, a 9 percentage point year-over-year increase. 

“The pandemic has driven organizations across the globe to digitize their operations and support remote workforces at a faster speed and greater scale than ever before. We remain focused on providing the technology and solutions our customers need to accelerate their digital organizations,” Cisco CEO Chuck Robbins said in a statement.

4. -- Oil Prices Rise as IEA Sees Demand Returning in Second Half of 2020

Oil prices in the U.S. were rising after the U.S. Energy Department reported a surprise decrease in domestic crude stocks, and the International Energy Agency said global demand could return in the second half of the year as economies recovery and OPEC production cuts take hold.

The IEA said Thursday in its monthly report for May that demand was a little stronger than expected but still projected global demand to decline by 21.5 million barrels a day. Global oil supplies were projected to fall by 12 million barrels a day, or about 12%, during May.

“We see early signs of a gradual rebalancing of oil markets. It is still gradual and it is still fragile,” said Fatih Birol, the IEA’s executive director. 

West Texas Intermediate crude contracts for June delivery, which expire next week, rose 5.22% to $26.61 a barrel.

5. -- SmileDirectClub Posts Wider-Than-Expected Loss

SmileDirectClub  (SDC) - Get Report fell 0.91% in premarket trading to $7.65 after the teeth-straightening company reported a first-quarter loss wider than analysts' expectations and missed sales forecasts.

SmileDirectClub posted a loss in the period of $107 million, or 28 cents a share, as sales rose 11% to $197 million.

Analysts had been calling for a loss of 21 cents a share on sales of $213 million.

“Despite these challenging times and a unique and complex operating environment, the SmileDirectClub team has navigated through the initial obstacles of the global pandemic by implementing changes to how we operate our business,” said SmileDirectClub CEO David Katzman in a statement.