US open: Stocks retreat following surprise increase to jobless claims
Wall Street stocks were lower at the opening bell on Thursday following the release of this week's jobless claims data and some key corporate earnings.
As of 1530 BST, the Dow Jones Industrial Average was down 0.47% at 26,877.86, while the S&P 500 was 0.23% lower at 3,628.49 and the Nasdaq Composite started out the session 0.37% weaker at 10,666.10.
The Dow opened 127.98 points lower on Thursday, reversing some of the gains recorded in the previous session despite US-Sino tensions coming back into focus as news of a coronavirus vaccine deal between the White House and pharma groups Pfizer and BioNTech lifted sentiment.
Thursday's main focus was the Labor Department's jobless claims data, which saw initial jobless claims in the US rise modestly and somewhat unexpectedly during the previous week, marking the first increase since March.
Initial claims for the week ending on 18 July rose by 109,000 to reach 1.416m, a far cry from the dip to 1.28m economists had forecast as the reimposition of lockdown measures led to renewed increases.
However, the four-week moving average of initial claims, which aims to smooth out the variations in the data from one week to the next, retreated by 16,500 to 1,360,250. Secondary unemployment claims also retreated by 1.10m to 16.19m over the week ending 11 July.
Oanda's Edward Moya said: "US stocks struggled to hold onto gains after investors assessed a downbeat weekly jobless claims report.
"The recovery appears to be stalling as jobless claims rose for the first time since March and as continuing claims remain elevated. Washington DC will focus on the total number of claims which improved slightly to 31.8 million, likely keeping the pressure for the fiscal stimulus package to get done before the end of the month. The economy does not seem to be on sound footing anymore and the with high uncertainty with the direction of the coronavirus, businesses will likely struggle to justify hirings."
Focus was also on some key corporate earnings from Tesla and Microsoft overnight as Tesla smashed analyst expectations with a fourth consecutive profitable quarter, while Microsoft shares were lower in extended trading despite posting largely positive results. American Airlines posted a second consecutive quarterly loss as Covid-19 continued to hammer demand, Southwest Airlines also cited similar reasons for its $915m quarterly loss.
Still in the corporate space, AT&T will also post earnings on Thursday.
Word that Republican lawmakers were mulling over the concept of extending a watered-down version of current unemployment benefits through to the end of 2020 initially led to some optimism on the Street.
On Thursday, Treasury Secretary Steven Mnuchin said an extension in unemployment benefits would be based on "approximately 70% wage replacement".
Also on the macro front, the Kansas Fed's manufacturing index for July will follow at 1600 BST.