Wall Street opens in the red after jobless claims unexpectedly rise

The main indices on Wall Street slumped on Thursday morning after the latest US jobless figures proved a nasty surprise for markets.

In the early minutes of trading, the Dow Jones Industrial Average was down 0.69% at 31,391 while the S&P 500 dropped 0.77% to 3,901 and the Nasdaq fell 1.13% to 13,807.

Sentiment was knocked by data for the week to February 13 which showed that 861,000 American filed for unemployment benefits in the period, up 13,000 on the prior week’s figure and well above the 765,000 predicted by analysts. The previous week’s figure was also revised upwards to 848,000 from 793,000.

Ian Shepherdson at Pantheon said despite the jump last week he expected to see “a sustainable downward trend emerge over the next couple months as the economy gradually reopens”, although he added that claims “likely will be temporarily boosted by the extraordinarily severe weather across much of the country this week”.

8:00am: Wall Street to head lower

The main US indices are heading for a sluggish start on Thursday as investors awaited the latest set of jobless claims data.

Spread-better quotes expect the Dow Jones Industrial Average to shed 94 points at the opening bell, while the S&P 500 is expected to drop 13 points and the Nasdaq is predicted to slide 95 points.

The weekly jobless claims are expected to fall from 793,000 to 765,000, with David Madden at CMC Markets UK noting that “should the [jobless] reading fall below 779,000 it would be the lowest level since early December”.

While markets have been driven higher in recent weeks by signs that the economy could be starting to recover from the pandemic, notably vaccine rollouts and good quarterly results, momentum appears to be running out with few catalysts remaining to push equities upwards.

The recent power outages amid brutal winter conditions in Texas may also give some investors cause for concern, particularly in terms of gas and oil prices, which have been pushed higher as Texan oil production is slowed by the freezing weather.

Meanwhile, observers will also be keeping an eye on the Congressional hearing later today concerning the GameStop Corp (NYSE:GME) saga, with testimony due from a number of key actors in the incident including the CEO of trading app Robinhood, the boss of social network Reddit and YouTube investor Roaring Kitten.

Four things to watch for on Thursday:

• Big names in the earnings diary will include computer chip maker Applied Materials Inc (NASDAQ:AMAT) and utility company Southern Co (NYSE:SO)
• Retail giant Walmart Inc (NYSE:WMT) will also be in focus after the company unveiled plans for a US$20bn stock buyback despite its earnings falling short of forecasts
• Tech giants Facebook Inc (NASDAQ:FB) and Google parent Alphabet Inc (NASDAQ:GOOGL) will also be looked at after the former sparked outrage in Australia by banning all news content while the latter struck a deal with Australian news publishers for content
• Meanwhile, on the macro front investors will be keeping an eye on the latest weekly jobless figures, as well as the Philly Fed manufacturing index

Story by ProactiveInvestors