By Peter Nurse
Investing.com - U.S. stocks are seen opening sharply lower Thursday, falling back from record levels as key employment data points to a slowdown n the U.S. recovery just as the Federal Reserve starts thinking about tightening monetary policy and Covid cases surge globally.
At 9 AM ET (1300 GMT), the Dow Futures contract was down 475 points, or 1.4%, S&P 500 Futures traded 55 points lower, down 1.3%, while Nasdaq 100 Futures dropped 195 points, or 1.3%.
The broad-based S&P 500 closed Wednesday up 0.3% at an all-time high, the Dow Jones Industrial Average also gained 0.3%, or over 100 points, while the technology-heavy Nasdaq Composite closed just higher, another record close.
The number of Americans filing new claims for unemployment benefits rose unexpectedly last week, with initial jobless claims rising 2,000 from the previous week to 373,000, an indication that the labor market recovery from the Covi-19 pandemic continues to be choppy. The number of claims had been expected to fall to a new post-pandemic low of 350,000.
The numbers add to concerns about the impact of the Covid-19 virus, and particularly the delta strain, on global economic growth. They come on the same day that Japan declared a state of emergency for the Tokyo prefecture, on the eve of the summer Olympic Games.
A number of Asian countries are struggling with new outbreaks, while the U.K. recorded over 30,000 new cases on Wednesday, for the first time since January.
“New outbreaks are still one of the biggest downside risks in terms of the sustained economic recovery moving forward,” Mathias Cormann, secretary-general of the OECD, said Thursday.
This minutes from the Federal Reserve last policy meeting, released Wednesday, showed that some policymakers think the economic conditions need to start scaling back the central bank’s bond-buying program could be "met somewhat earlier than they had anticipated at previous meetings in light of incoming data."
In corporate news, Alphabet (NASDAQ:GOOGL) will be in focus Thursday the day after a number of states took the owner of Google to court alleging it operates an illegal monopoly with its Google Play app store. Railroad stocks may also come in for scrutiny after a report by The Wall Street Journal saying that the Biden administration is preparing an executive order aiming to break the market power of big transportation companies.
Elsewhere, oil prices dropped Thursday, falling for the third consecutive session, on the back of the concerns about global growth and amid continued uncertainty over future OPEC+ production levels after a dispute halted talks earlier this week.
The American Petroleum Institute reported a reduction of almost 8 million barrels from stockpiles last week, largely matching the 8.2 million-barrel draw recorded during the previous week, and traders will be looking to see if the official figures from the U.S. Energy Information Administration confirm this.
By 9 AM ET, U.S. crude futures traded 0.3% lower at $71.93 a barrel, while the Brent contract fell 0.2% to $73.18.
Additionally, gold futures rose 0.7% to $1,815/oz, while EUR/USD traded 0.5% higher at 1.1846.