• February 5, 2023

Dow falls 250 points as rise in jobless claims and bond yields pressures stocks

U.S. stock indices traded sharply lower Thursday as investors digested economic data showing little improvement in the job market and a surge in bond yields on worries over possible inflation, with oil prices at a 12-month high and copper prices in the air Near a decade high.

An increasing pace of coronavirus vaccinations, declining COVID case numbers, good quarterly corporate earnings and hopes for a better economy in the second half of 2021 have helped push stocks to record highs this month, but investors found few Reasons to push stocks higher.

How are stock benchmarks performing?
  • The Dow Jones industrial average
    DJIA, -0.76%
    drops by 253 points or 0.8% to 31,360.

  • The S&P 500 Index
    SPX, -0.86%
    listed 34 points or 0.9% lower at around 3,897.

  • The Nasdaq Composite
    COMP, -1.23%
    gave up 166 points to 13,800, a decrease of 1.2%.

On WednesdayThe Dow posted its third straight record, but the S&P 500 and Nasdaq Composite Indexes were negative.

What is driving the market?

Market participants digested some signs of weakness in the US macroeconomic recovery. according to weekly unemployment claims was its highest level in a month at 861,000, and manufacturing activity reading also fell short of expectations.

“Unemployment claims data continues to paint a bleak picture of the labor market, with 1.38 million new claims for unemployment benefit last week, the highest number since early December,” wrote Lydia Boussour, senior US economist and Gregory Daco, chief US – Economist at Oxford Economics. in a Thursday note.

“The latest data on jobless claims coincides with the optimistic message of the labor market indicators earlier this year,” wrote the economists.

Meanwhile, manufacturing activity in the Philadelphia area of ​​the Federal Reserve was read Philly Fed Manufacturing Indexfell in February from 26.5 in the previous month to 23.1. Any value above zero indicates expansion in manufacturing.

Disappointing economic data was compounded by weaker than expected results from Walmart
WMT, -5.41%
Colin Cieszynski, chief market strategist at SIA Wealth Management, said early Thursday.

“Walmart, the world’s largest retailer, had disappointing results, suggesting that the strong January for US retail sales reported yesterday may not be enough to offset the November-December weakness,” he said in a daily research report.

The U.S. economy showed signs of steady, if not rapid, improvement, underscored by retail sales, which showed a seasonally adjusted 5.3% month-over-month increase in January as output data neared its best level in a year .

The data is set against the backdrop of declining cases of coronavirus in the United States. For the past week, an average of 77,661 new cases were reported per day, a 43% decrease from the average two weeks ago. To date, 57.4 million Americans, or 17% of the population, have been vaccinated at the rate of 1.61 million doses per day, according to data from Johns Hopkins University.

Market participants have indicated that Congress has made progress on further fiscal stimulus as a reason to be optimistic about buying stocks on Wall Street. Washington lawmakers are still negotiating the terms of the president’s $ 1.9 trillion COVID aid package. The Biden administration is expected to release a plan next month to outline its “Better Downgrade” agenda, which will be heavily focused on infrastructure. On WednesdayPresident Joe Biden presented some elements of his plans to union leaders.

Betting that the economy will improve sometime this year, however, has rekindled fears of a rapid spike in inflation and pushed government bond yields soaring. The 10-year Treasury bill is 1.3%, its highest level in over a year. But the prospect of higher borrowing costs overshadow risky assets how they are trading at almost record highs.

In the meantime, investors have been keeping an eye out for the brutal winter conditions that are leaving millions of Americans without power in places like Texas as winter storms swamp much of the US. The weather has pushed natural gas prices up and brought crude oil values ​​to their highest level in more than a year.

Separately, the House Financial Services Committee began questioning several of the key players in the GameStop stock saga on Thursday lunchtime after the public publicly shouted against the online trading platform Robinhood and other brokers’ decisions to restrict trading in stocks, including GameStop Corp..
GME, -2.63%,
and AMC Entertainment Holdings
AMC, + 3.10%.

In other economic reports, a housing construction report showed this Building permits rose 10.4% to 1.88 million a year in January, while housing starts fell 6% last month to 1.58 million annual rate. A trade balance showed that US import prices rose 1.4% in January, the largest increase since 2012.

Which stocks are in focus?
  • Walmart Inc.
    WMT, -5.41%
    approved a $ 20 million buyback program and increased dividend Thursday 4 cents to $ 2.20 per share its quarterly results . The shares fell 5.2%.

  • Marriott International Inc.. Shares TO DAMAGE The decline was down 0.6% on Thursday after the hotel operator posted a loss and weaker-than-expected revenue in the fourth quarter as the coronavirus pandemic kept travelers away.

  • Rigel Pharmaceuticals Inc.. Shares RIGL rose 10.5% on Thursday after the company agreed to join Eli Lilly and Co..
    LLY, -2.07%
    in the development of RIPK1 inhibitors for the treatment of immunological and neurodegenerative diseases.

  • Shares of Hormel Foods Corp.. HRL rose 1.9% on Thursday after parent company of grocery brands like SPAM, SKIPPY, Hormel Deli Meats and Chili, and Applegate reported fiscal first quarter results that exceeded expectations.

  • Shares of Barrick Gold Corp. GOLD fell 1.3% after hitting a 10-month low on Wednesday, despite the gold mining company reporting fourth quarter earnings and sales that exceeded expectations.

  • Shares of Twilio Inc.
    TWLO, + 7.42%
    rose 8% after the software company reported fourth fiscal quarter results.

How are other assets performing?
  • The yield on the 10 year Treasury bill TMUBMUSD10Y fell 2 basis points to around 1.28% on Thursday. Bond prices move in the opposite direction of returns.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of six major competitors, fell 0.3%.

  • Oil futures With the US benchmarks, power interruptions continued to decline across the country CL.1 down 0.2% to trade at $ 61.02 a barrel.

  • Gold futures GC00 were up 0.1% but remained below $ 1,800 an ounce after slipping 1.5% on Wednesday.

  • The Europe-wide Stoxx 600 Index SXXP fell 0.8% and the London FTSE 100 stock index UKX fell 1.4%.

  • Markets in Hong Kong HSI closed 1.6% lower while the Japanese Nikkei 225 index I shed 0.2%. China’s Shanghai Composite Index
    SHCOMP, + 0.55%
    finished 0.6% while the CSI 300
    000300, -0.68%
    closed 0.7%.

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