U.S. stocks were indicated lower Thursday as the main benchmarks were on pace to slump for a third session, even as the latest data on the economy appeared to point to improvement as the country emerges from the COVID pandemic.
Equity markets have been reacting to a rapid rise in borrowing costs, reflected in surging government bond yields, which has cooled somewhat.
How are stock benchmarks performing?
Futures for the Dow Jones Industrial Average
were trading 96 points, or 0.3%, lower at 32,222.
S&P 500 futures
fell 13.05 points to reach 3,867.75, a fall of 0.4%.
were at 12,734.25, down 64.50 points for a 0.5% slump, which could signal that the Nasdaq Composite wipes out its year-to-date gains.
On Wednesday, the Dow
closed 3 points lower, virtually unchanged at 32,420.06, the S&P 500
fell 21.38 points, or 0.6%, ending at 3,889.14, while the Nasdaq Composite Index
shed 265.81 points to finish at 12,961.89, a decline of 2% and the small-capitalization Russell 2000 index
shed 51.42 points, or 2.4%, ending at 2,134.27.
What’s driving the market?
Stock indexes slipped even as a report on weekly first-time jobless claims hit the lowest level in over a year and a reading on fourth-quarter gross domestic product was raised to 4.3%, beating consensus estimates of 4.1%.
On the jobs front, the number of people seeking unemployment benefits for the week ended March 20 totaled 684,000, marking the first time the number has been below 700,000 since March, when the public-health crisis took a significant hold of the economy. Economists surveyed by Dow Jones had expected 735,000 applications from 770,000 in the period before.
It’s difficult to glean how the data will be interpreted by market that has been keenly worried about the economy overheating and inflation overshooting the Federal Reserve’s expectations. Still, the labor-market numbers still point to millions of Americans that remain unemployed.
On Thursday, Fed Chairman Jerome Powell said that the rebound from COVID has taken shape faster than policy makers had expected but emphasized that the central bank would reduce accommodative measures only gradually.
“We will very gradually over time and with great transparency, when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times,” Powell told NPR, a day after his second day of congressional testimony to explain the health of the economy in the aftermath of the COVID pandemic.
The choppy trade in stock markets this week has been partly attributed to quarter-end rebalancing and a rotation in and out of sectors that are expected to perform better when the economy stages a more pronounced recovery from the COVID-19 pandemic.
However, few strategies have proven successful in recent trades, with growth stocks and many value-oriented names getting equally hammered in recent trading action.
The moves have come even as bond yields have slipped in the past week on growing concerns about extended COVID lockdowns in Europe, while the rise in yields so far this year is expected to lead to substantial selling of stocks and buying of bonds as funds rebalance, Sphia Salim, European rates strategist at Bank of America, was quoted as saying in the Financial Times. Some $88 billion is slated to be shifted from equities to bonds, BofA estimates.
Long-dated Treasury bond yields this week have fallen significantly though, with the 10-year benchmark note
yielding around 1.60%, compared with 1.729% at the end of last week.
Powell on Wednesday in his second day of congressional testimony about the U.S.’s economic response to the pandemic, said that he isn’t concerned about the recent rise in long-term bond yields.
Looking ahead, a number of Fed speakers are expected on the day, including Fed Vice Chairman Richard Clarida at around 10 a.m., Atlanta Fed President Raphael Bostic at noon, Chicago Fed President Charles Evans at 1 p.m. and San Francisco Fed President Mary Daly at 7 p.m.
Which stocks are in focus?
- SunPower Corp. SPWR said Chairman and Chief Executive Tom Werner will retire from the company.
- Chipotle Mexican Grill Inc. CMG said Thursday that it has invested in Nuro, an autonomous delivery company.
- Darden Restaurants Inc. DRI shares rose in Thursday premarket trading after the Olive Garden parent reported fiscal third-quarter earnings and sales that beat the Street.
- Shares of United Airlines Holdings Inc. UAL rose in premarket trading Thursday, after the air carrier announced plans to resume more than 20 domestic flights, and to fly to Latin America more than 100% of its pre-pandemic schedule.