By Geoffrey Smith
Investing.com -- U.S. stock markets opened lower on Thursday, retracing some of Wednesday's gains after another big rise in initial jobless claims dented optimism about a quick recovery for the economy.
The Bureau of Labor Statistics said another 3.84 million filed initial claims for jobless benefits last week, above expectations of 3.5 million but still a fourth straight weekly drop. Continuing claims at 17.99 million were below expectations but still a record high for recent history.
By 10:15 AM ET (1415 GMT), the Dow Jones Industrial Average was down 220 points or 0.9% at 24,414 points, while the S&P 500 was down 0.7%. The Nasdaq Composite outperformed, losing only 0.1%, insulated by stronger-than-expected quarterly updates on Wednesday evening from large caps Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB) and Tesla (NASDAQ:TSLA).
Gains were concentrated in the megacaps, with most of the rest of the market running out of steam after a relief rally that many say has baked in too optimistic a recovery scenario.
Facebook stock was up 6.6% after the social media giant reported that advertising revenue stabilized in April, supported by e-commerce and gaming companies aiming to cash in on the inability of the public to get out of the house for either recreation or shopping.
Microsoft stock rose 1.0% after the software giant reported an across-the-board increase in revenue and a rise in earnings. Demand for its cloud hosting business Azure was a particular beneficiary of businesses' need to do more of their stuff online. Tesla, which reported a surprise profit for the quarter late on Wednesday, was also up 6.1%, despite not being able to name a date for the reopening of its Fremont factory (much to the disgust of its CEO Elon Musk).
On the busiest day of the earnings season, however, there were just as many low points. McDonald’s (NYSE:MCD) stock fell 2.3% after reporting a 6% drop in quarterly sales, while Macy’s (NYSE:M) couldn't get a break even after announcing it aims to reopen 68 of its stores from Monday, and the rest of its chain within six weeks. Macy's stock fell 3.0%.
Zoom Video (NASDAQ:ZM) fell 7.2% as the signs of economic reopening took away what the lockdowns had given, while the biggest decline was in Royal Dutch Shell (LON:RDSa) ADRs, which tumbled over 11% as the company cut its dividend for the first time since the Second World War. The stock got no support from another sharp rise in U.S. crude prices as traders moved to price in an easing of the supply/demand imbalance.
European bank ADRs also fell heavily after the European Central Bank chose not to expand its bond-buying program, relying instead on an indirect cut to funding costs that will have little immediate impact on their profitability. Deutsche Bank (NYSE:DB) ADRs were down 3.6%, while Banco Santander (NYSE:SAN) ADRs were down 5.6%.