Thursday July 16th

16-07-2020

Dow futures fall 200 points after weaker-than-expected jobs data

U.S. stock index futures fell on Thursday with investors assessed earnings results and the latest economic data. Dow Jones Industrial Average futures traded 200 points lower, pointing to a 180-point loss at the open. S&P 500 futures dipped 0.8% and Nasdaq-100 futures were off by 1.5%. Bank of America reported better-than-expected earnings for the previous quarter. However, the stock fell more than 2% as the company set aside $4 billion for coronavirus-related losses. Dow member Johnson & Johnson traded 0.8% lower despite posting better-than-expected results. Morgan Stanley shares rose 0.9% after the company’s quarterly earnings easily beat analyst expectations on the back of strong trading revenues. Netflix is set to report earnings after the bell. On the data front, the weekly jobless claims number came in slightly worst than expected. The Labor Department said a total of 1.30 million Americans filed for unemployment benefits last week, compared to Dow Jones estimates of 1.25 million first-time filers. Meanwhile, retail sales jumped 7.5% in June, topping expectations of a 5.2% increase per Dow Jones. This reading came after May’s 17.7% surge, which blew past estimates and was the largest reading on record. Thursday’s moves came following a major sell-off in mainland Chinese stocks, which saw the Shanghai composite down more than 4% on the day. That came despite China reporting that the country’s GDP grew 3.2% in the second quarter of the year as compared to a year ago — above expectations of a 2.5% growth by economics in a Reuters poll. Stocks finished Wednesday’s session higher, fueled by positive news regarding a potential coronavirus vaccine, as well as strong earnings results from Goldman Sachs. Data published by the New England Journal of Medicine showed Moderna’s coronavirus vaccine produced a “robust” immune response, or neutralizing antibodies, in all 45 patients in its early stage human trial. With Wednesday’s gain, the S&P 500 is now less than 5% away from recovering its February all-time high level, although some investors believe the rally has run too far, too fast, given all the uncertainties that remain in the market. “We are not out of the woods yet and are still far away from returning to pre-Covid-19 economic levels,” said Nate Fischer, chief investment strategist at Strategic Wealth Partners. “The market is in need of a health-care solution, as the economy was forced to shut down for a health-care issue. So far, we’ve had fiscal and monetary assistance to this problem. Until a real medical remedy is found, the market will remain volatile,” he added. Stocks in Asia Pacific were lower on Thursday as investors reacted to a slew of Chinese economic data released earlier. Mainland Chinese stocks led losses regionally as they plunged on the day, with the Shanghai composite down 4.5% to about 3,210.10 while the Shenzhen component plummeted 5.372% to end its trading day at 12,996.34. Hong Kong’s Hang Seng index declined 2% to close at 24,970.69. In Japan, the Nikkei 225 dipped 0.76% to close at 22,770.36 while the Topix index ended its trading day 0.66% lower at 1,579.06. South Korea’s Kospi declined 0.82% to close at 2,183.76 as the Bank of Korea announced Thursday its decision to leave the base rate unchanged at 0.5%. Oil prices slid on Thursday after OPEC and allies such as Russia agreed to ease record supply curbs from August, though the drop was cushioned by hopes for a swift U.S. demand pick-up after a bigger-than-expected drawdown from the country’s crude stocks. Brent crude fell 32 cents, or 0.73%, to $43.47 per barrel, and U.S. West Texas Intermediate crude dropped 42 cents, or 1%, to $40.77 a barrel. They rose 2% the previous day, helped by the U.S. crude inventories drop. Gold edged lower on Thursday as the dollar firmed, but worries over mounting coronavirus cases and worsening U.S.-China ties limited declines and kept bullion above the psychological $1,800 level. Spot gold eased 0.4% to $1,804.62 per ounce. Prices were $13.09 shy of $1,817.71, its highest since September 2011, hit last week. U.S. gold futures fell 0.4% to $1,806.60.