Market Snapshot: Stocks under pressure after jobless claims rise, with all eyes on Washington stimulus efforts

Market Snapshot: Stocks under pressure after jobless claims rise, with all eyes on Washington stimulus efforts

U.S. stocks opened lower after an increase in weekly new claims for jobless benefits, even as Senate Republicans and the White House announced progress toward an agreement on a new package of funds to help businesses and households stricken by the COVID-19 pandemic.

Investors were also upbeat on earnings from the likes of Tesla, with a heavy slate of quarterly results on deck Thursday.

How are benchmarks performing?

The Dow Jones Industrial Average DJIA, -0.30% traded lower by 165 points, 0.6%, near 26,841 , while the S&P 500 index SPX, -0.00% was off 12 points or 0.4%, trading near 3,264. The Nasdaq Composite Index COMP, -0.04% was about 51 points or 0.5% lower, near 10,655.

On Wednesday, the Dow jumped 165.44 points, or 0.6%, to end at 27,005.84, its highest close since June 9, according to Dow Jones Market Data. The S&P 500 gained 18.72 points, or 0.6%, to close at 3,276.02. The Nasdaq Composite Index added 25.76 points, or 0.2%, finishing at 10,706.13.

What’s driving the market?

Wall Street opened with modest losses on Thursday, despite a number of narratives that could embolden bullish investors to take on more risk.

Senate Republicans and the White House struck an agreement on a $1 trillion coronavirus relief package, as a $600 weekly supplement to unemployment benefits is set to expire at the end of this month. The proposal sets the stage for further talks between the Senate Republicans and Democrats, who have coalesced around a $3.5 trillion bill that was passed in the House in May, but analysts think negotiations will remain tense.

Meanwhile, investors parsed a release of weekly employment-benefit claims from the Labor Department, which showed 1.42 million Americans filed for first-time benefits, a rise of 109,000 and the first rise since late March.

The report has become one of the key measures of the state of the COVID-19 pandemic that has been resurgent in many states recently, forcing the reimposition of restrictions to curtail the spread of the deadly illness.

Market participants are parsing a barrage of earnings, include a trio of components from the Dow, including Intel INTC, +0.61% , Travelers Cos. TRV, -2.66% , and Dow Inc. DOW, -3.24%

Those reports come after electric-vehicle maker Tesla produced upbeat results, which featured its fourth consecutive profit thanks to more than $400 million in electric-vehicle tax credits, paving the way for the popular company to join the S&P 500.

Thus far, investors have shrugged off escalating tensions between the U.S. and China, with Beijing vowing to close the U.S. consulate in the southwestern city of Chengdu, according to the South China Morning Post. The move comes after the U.S. ordered the closure of a Chinese consulate in Houston, citing fraud and espionage, highlighting rising tensions between the global superpowers.

In coronavirus news, the U.S. now has 3.9 million cases and 143,000 deaths, according to data aggregated by Johns Hopkins University.

A “trifecta” of factors — fiscal stimulus, encouraging news on the prospect of a vaccine against COVID-19, and better-than-expected economic news — helped lubricate the markets earlier in the pandemic period, said Michael Stritch, chief investment officer at BMO Wealth Management.

But more recently, Stritch said in an interview, “the virus has reasserted itself. Our view had always been that we’d have a wavy kind of recovery. And yes, we do need more on the fiscal side now. From the market’s perspective, it’s a push and pull where bad economic data may light a bit of a fire under Congress to act more quickly.”

Like many other observers, Stritch sees markets likely to remain “aggressively flat” for the foreseeable future, until there’s more clarity on a treatment.

A report on leading U.S. economic indicators, released at 10 a.m. Eastern, rose in June but signalled the economy was likely to remain in recession territory.

Which stocks are in focus?
How are other markets trading?

In Europe, the Stoxx 600 Europe index SXXP, -0.10% was up 0.2%, while the U.K.’s FTSE UKX, +0.12% powered 0.4% higher.

Gold futures GCQ20, +0.98% rose 0.8% to $1,879.40 an ounce Thursday on the New York Mercantile Exchange, on track for a fresh record high. September futures for the U.S. crude benchmark CLU20, -0.62% were down 0.8% to $41.58 a barrel on concerns about rising inventories.

The 10-year Treasury note yield TMUBMUSD10Y, 0.573% fell two basis points to 0.576% after the jobless claims report was released. Yields move in the opposite direction of prices.

In currency markets, the dollar fell 0.1% against its six major rivals, according to the ICE U.S. dollar index DXY, -0.14% .

In Asia, the Nikkei NIK, -0.57% closed 0.6% lower, at 22,751.61, while China’s CSI 300 gauge 000300, -0.04% was virtually unchanged at 4,712.44. Hong Kong’s Hang Seng index HSI, +0.81% rose 0.8% to close at 25,263.

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