Market Snapshot: Stock-index futures pare losses as jobless claims fall below 1 million

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Stock-index futures turned positive Thursday as first-time claims for unemployment benefits declined much more rapidly than anticipated, but gains remained muted as investors monitored a stalemate between congressional Democrats and the White House over a coronavirus aid package.

What are major benchmarks doing?

Futures on the Dow Jones Industrial Average YM00, +0.00% were up 21 points, or 0.1%, at 27,887, while S&P 500 futures ES00, +0.04% rose about 3 points, or 0.1%, to 3,373. Nasdaq-100 futures NQ00, +0.60% were up 56 points, or 0.5%, at 11,182.

The Dow on Wednesday DJIA, +1.04% rose 289.93 points, or 1.1%, to finish at 27,976.84, while the S&P SPX, +1.40% advanced 46.66 points, or 1.4%, to close at 3,380.35, less than 0.2% below its record finish of 3,386.15 on Feb. 19. The large-cap benchmark traded as high as 3,387.89 in late trade. The Nasdaq Composite COMP, +2.12% jumped 229.42 points, or 2.1%, finishing at 11,012.24.

What’s driving the market?

Initial claims for unemployment benefits, perhaps the most closely followed government data series of the pandemic, showed marked improvement in the most recent week, falling to 963,000. Economists surveyed by MarketWatch, on average, had forecast the number of seasonally adjusted initial claims for the week ended Aug. 8 to fall to 1.08 million from 1.19 million the previous week.

That saw stock futures erase small losses to turn positive. But questions still remain about fiscal stimulus for an economy that’s still reeling from the effects of the pandemic.

Top Democrats and White House officials spoke by phone Wednesday over another round of coronavirus aid, but both sides then blamed the other for a continued deadlock that’s been in place since negotiations aimed at extending a number of lapsed measures, including additional unemployment benefits, collapsed at the end of last week. President Donald Trump over the weekend signed executive orders to partially extend some of those measures, but they face legal challenges and doubts over their effectiveness due to logistical constraints.

But with the S&P 500 knocking on the door of an all-time high, investors have appeared to be largely looking beyond the conflict, analysts said.

“Despite the uncomfortable prospect of a long delay before the United States gets its next big injection of fiscal stimulus, and possibly not before the presidential election in November, there is little panic in the markets, with most investors betting on some kind of a deal sooner rather than later,” said Raffi Boyadjian, senior investment analyst at XM, in a note.

Stocks have been underpinned by economic data that remains relatively buoyant despite a persistently high number of new coronavirus cases in the U.S.

“The equity market, in the U.S. and elsewhere is taking comfort from the fact that economic data show resilience to spikes in virus infections. This has been true for the U.S. economy for a while, and we can see it in Asia too,” said Kit Juckes, global macro strategist at Société Générale, in a note.

The global tally of confirmed cases of COVID-19 climbed to 20.6 million on Thursday, with the death toll rising to 749,656, according to data aggregated by Johns Hopkins University. At least 12.8 million people are confirmed to have recovered. The U.S. has 5.19 million cases, and COVID-19-related deaths stand at 166,027.

And while the number of U.S. cases has remained high, investors appeared to focus instead on a slowdown in the number of new infections. Over the past week, there have been an average of 53,723 cases per day in the U.S., a decrease of 17% from the average two weeks earlier, according to a New York Times tracker.

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

In Asia overnight, China’s CSI 300 index 000300, -0.25% closed 0.3% lower, while Hong Kong’s Hang Seng Index HSI, -0.05%, moved fractionally lower and Japan’s Nikkei 225 NIK, +1.77% hot up 1.8%.

In Europe, the pan-European Stoxx 600 Europe Index SXXP, -0.44% was 0.5% lower and the FTSE 100 UKX, -1.01% slumped 1.1%.

The yield on the 10-year Treasury note TMUBMUSD10Y, 0.683% was up slightly to 0.685%. Bond prices move inversely to yields.

Gold GC00, -0.36% slumped 0.9% to $1,932.00 an ounce. Crude-oil prices were down 0.3% to $42.56 a barrel, one day after touching the highest close for a front-month contract since March 5.

The greenback continued its slide, with the ICE U.S. Dollar Index DXY, -0.36% a gauge of the buck against a half-dozen major rivals, down 0.4% to 93.08.

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