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Market Snapshot: Stock futures head higher, erase losses after fall in jobless claims

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U.S. stock-index futures trimmed or erased losses after data shows a further fall in first-time claims for jobless benefits.

How are stock benchmarks performing?

On Wednesday, stocks ended well off session lows but still lost ground. The Dow
DJIA,
-0.48%

fell 164.62 points to close at 33,896.04, a decline of 0.5%, after a drop of more than 580 points at its session low. The S&P 500 index
SPX,
-0.29%

shed 12.15 points, or 0.3%, to end at 4,115.68. The Nasdaq Composite Index
COMP,
-0.03%

finished virtually flat, off 3.90 points at 13,299.74, well off its Wednesday low of 13,072.23.

What’s driving the market?

First-time applications for U.S. unemployment benefits fell to a pandemic low last week, the government reported Thursday. Initial jobless claims fell 34,000 to 444,000 in the week ended May 15.Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims to fall to a seasonally adjusted 452,000.

Separately, a Philadelphia Fed gauge of regional factory activity declined.

The data helped blunt a weaker tone across equity markets after a broad-based, global selloff on Wednesday that spread across assets viewed as risky, including equities, commodities and cryptocurrencies.

Analysts said stocks may continue to struggle.

“Momentum is indeed waning in U.S. stocks as fatigue sets in and anxiety slowly rises (elevated volatility), but we are missing a clear trigger for a significant, albeit temporary, setback,” wrote Sebastien Galy, strategist at Nordea Asset Management, in a daily note.

The downtrend shaping up in U.S. equity markets has been attributed to concerns about lofty stock valuations, uncertainties about the degree to which the recovery will boost inflation, and worries that evidence of excess is building in parts of the financial system.

Against that backdrop, turbulence has become a bigger feature of the market as investors parse key data points and comments from the Fed that could offer clarity on the outlook for the economy and market.

Market participants are still digesting Fed minutes from Wednesday, which showed that “a number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.”

Most Fed members have said that the economy hasn’t made substantial progress toward its goal of a healthy and vibrant labor market to merit a removal of accommodation, but talk of tapering has historically been a boogeyman for risk-taking.

“Tentative — the question remains: when does the Fed think it’s hit the landing area for the economy, and does inflation take off in the meantime?” wrote Neil Wilson, chief market analyst at Markets.com, in a note.

Adding to overall concerns about the mood on Wall Street, has been the downturn in bitcoin
BTCUSD,
+10.89%
,
which has been regarded as a sign of waning risk appetite. Bitcoin took a $10,000 U-turn on Wednesday, hitting a low around $30,000 only to return to a price around $40,000, amid a wild selloff for the world’s No. 1 digital asset.

Among Fed speakers, Dallas Fed President Rob Kaplan is slated to deliver a speech at economic development organization Borderplex Alliance at 10:30 a.m. Eastern. Kaplan has been virtually alone among Fed officials in arguing that policy makers should begin talking about an eventual withdrawal of monetary support.

Which companies are in focus?
  • Shares of Lithia Motors IncLAD fell 0.8% in premarket trading Thursday, putting them on track for a fourth straight loss, after the auto retailer announced the pricing of its $1 billion stock offering and upsized debt offering.
  • Hormel Foods CorpHRL, reported Thursday fiscal second-quarter profit and sales that topped expectations, and raised its full-year outlook, even as volumes declined. 
  • Pfizer IncPFE and German partner BioNTech SE BNTX said Thursday they have reached a new agreement with the European Commission to supply up to 1.8 billion additional doses of their COVID-19 vaccine.

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