US open: Stocks broadly flat, bank earnings and jobless data in focus

Wall Street stocks were ever so slightly in the red early on Thursday as market participants thumbed over more bank earnings and this week's key jobless claims report from the Labor Department.

As of 1520 BST, the Dow Jones Industrial Average was down 0.07% at 34,909.51, while the S&P 500 was 0.15% weaker at 4,367.87 and the Nasdaq Composite came out the gate 0.01% softer at 14,644.00.

The Dow opened 23.72 points lower on Thursday, cutting into gains recorded in the previous session as investors digested earnings from several of the nation's biggest banks.

Corporate earnings were again in focus at the open on Thursday, with Morgan Stanley's second-quarter revenues and profits exceeding expectations on the Street, driven by strength in both equities trading and investment banking. Morgan Stanley reported revenues of $14.8bn, ahead of estimates of $13.98bn, while earnings per share smashed expectations of $1.65 each at $1.85. Net income was $3.5bn, up from $3.2bn a year ago.

US Bancorp posted second-quarter revenues of $5.78bn and earnings per share of $1.28, beating estimates for prints of $5.62bn and $1.14, respectively, while Bank of New York Mellon said quarterly earnings per share had grown 12% year-on-year to $1.13 despite total revenues slipping 1% to $4.0bn in the three months ended 30 June as the group's investments in digitisation and open-architecture modular solutions continued to pay off.

Moving on from lenders, UnitedHealth, seen as somewhat of an industry bellwether, posted a 35.7% fall in quarterly profits as a recovery in the elective medical care market normalised costs for the US' largest health insurer.

On the macro front, first-time unemployment claims dropped to a new Covid-19 pandemic-era low of 360,000 in the week ended 19 June, a marked decrease when compared to the previous week's upwardly revised total of 386,000.

According to the Labor Department, initial unemployment claims came in at their best number since 14 March, 2020 last week, while continuing claims also fell sharply, declining by 126,000 to 3.24m - another new low for the US jobs market. Sharp declines in claims in Texas and Georgia accounted for almost all the decline, indicating that the early end to benefits may have encouraged people to re-enter the workforce. The number of Americans collecting benefits under all government programmes also fell sharply, dropping 449,642 to 14.2m - well above anything seen pre-coronavirus but far below the 33.2m citizens in the dole queue twelve months prior.

Also in macro headlines, the price of goods purchased overseas rose roughly as expected last month despite a large increase in energy costs. According to the Department of Labor, in seasonally adjusted terms the US import price index jumped at a month-on-month pace of 1.0% (consensus: 1.2%). While that was less than anticipated by economists, the 'miss' was offset by an upwards revision of three-tenths of a percentage point to the print for May to 1.4%.

Elsewhere, industrial output in the US grew more slowly than anticipated in June as a shortage of semiconductors kneecapped auto manufacturing. The Department of Commerce said that total industrial production rose by 0.4% month-on-month (consensus 0.6%) and revised down its estimates for February, April and May.

Still on data, the Philadelphia Fed's July manufacturing index revealed that factory activity in the US mid-Atlantic region slowed sharply for a third straight month in July to hit its lowest growth since December, with the central bank's business activity index falling to 21.9 from 30.7 in June - well below economists' expectations for a reading of 28.0.

Lastly, Federal Reserve chairman Jerome Powell was in the process of testifying in front of the Senate Banking Committee in Washington DC after having been grilled by Congress yesterday.

Also in focus, the yield on the benchmark 10-year Treasury note shed three basis points to 1.33%