Stock futures were mixed Thursday morning amid a deluge of new economic data, much of which was still consistent with a contraction but at least signaled some stabilization after an initial slump in activity.
A new report this morning showed new unemployment claims totaled a slightly greater than expected 2.123 million last week, though continuing claims for the prior week pulled back from a record high and fell for the first time during the pandemic. Meanwhile, first-quarter gross domestic product (GDP) was downwardly revised to show a 5.0% annualized decline, from the 4.8% previously reported.
So far this week, investors have been weighing signs of stabilizing US economic activity after last month’s deep downturn, along with hopes of a vaccine or treatment, against concerns that relations with China were set to become increasingly strained. China approved a draft decision for new national security legislation that would impose on freedoms in Hong Kong, in a move that would encroach on the autonomy of the region and jeopardize its special trade status with the U.S.
Still, the net effect of the myriad developments was risk-on for equities at least through Wednesday’s close, sending the S&P 500 to close above 3,000 for the first time since March 5 and the Dow to a close of more than 25,000 for the first time since March 10.
Some of the stocks that led the S&P 500’s more than 35% bounce from its March 23 lows, however, lagged in recent sessions. The tech-heavy Nasdaq underperformed against the other major equity indices again on Thursday, and the Communication Services and Information Technology sectors lagged in the S&P 500. President Donald Trump said earlier he planned to sign an executive order against social media companies, after Twitter added its first fact-checking labels to Trump’s tweets.
That rotation from high-growth tech to value names also came alongside states reopening their economies and helping catalyze an uptick in activity, bringing investors back into a broader basket of equities.
“I think we can say at least now looking backwards, April was the economic bottom,” David Nelson, chief strategist at Belpointe Asset Management, told Yahoo Finance’s On the Move Wednesday afternoon. “We were at a virtual standstill. Anything has to be better than where we were. And as you get economic activity, there’s this natural gravitation to what I would call deeper cyclical names, and that points you to industrials, financials and some of the others.”
Still, the depths of the downturn in April and early May as underscored in recent reports like the Federal Reserve’s Beige Book on Wednesday highlighted the ongoing process of getting activity back to pre-virus levels. And the coronavirus case count and death toll from the pandemic continued to climb, albeit at decelerating paces, with the U.S. Covid-19 death toll topping 100,000 on Wednesday.
“Economic activity declined in all Districts – falling sharply in most – reflecting disruptions associated with the COVID-19 pandemic,” according to the Beige Book. “Consumer spending fell further as mandated closures of retail establishments remained largely in place during most of the survey period,” which ran through May 18.
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9:34 a.m. ET: Stocks mixed at the open
Here were the main moves in markets, as of 9:34 a.m. ET:
S&P 500 (^GSPC): +2.54 points (+0.08%) to 3,038.67
Dow (^DJI): +47.07 points (+0.18%) to 25,595.34
Nasdaq (^IXIC): -24.84 points (-0.23%) to 9,390.75
Crude (CL=F): +$0.13 (+0.4%) to $32.94 a barrel
Gold (GC=F): +$13.60 (+0.79%) to $1,740.40 per ounce
10-year Treasury (^TNX): +2.1 bps to yield 0.698%
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8:34 a.m. ET: Durable goods orders extend March decline, but drop by less than expected margin
Durable goods orders fell 17.2% in April, the Census Bureau said in its preliminary report. This was a smaller than expected drop compared to the 19.0% decline expected for the month, but extended declines after a 16.6% drop in March.
The decline was led in large part by orders for non-defense aircraft and parts, along with autos. Excluding transportation orders, durable goods orders fell 7.4% in April, versus a 15.0% drop expected. March’s durable goods orders excluding transportation were down 1.7%.
Non-defense capital goods orders, excluding aircraft, were down 5.8% in April after a 1.1% drop in March. This was also better than the 10.0% decline anticipated. This metric serves as a closely watched proxy for business spending plans.
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8:31 a.m. ET: First-quarter GDP revised to a 5.0% slump, vs. 4.8% previously reported
First-quarter gross domestic product (GDP) fell 5.0% on a quarter over quarter, annualized basis, the Bureau of Economic Analysis said in its second revision of first-quarter GDP this morning. GDP was previously reported to have fallen 4.8% in the first quarter.
Personal consumption, however, was upwardly revised to a slightly shallower 6.8% slump, from the 7.6% drop previously reported.
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8:30 a.m. ET: Jobless claims totaled 2.123 million for the week ended May 23
First-time filings for unemployment claims were 2.123 million for the week ended May 23, the Labor Department said in its weekly report Thursday. This was just slightly above expectations for initial jobless claims to come in at 2.1 million, according to Bloomberg data.
The prior week’s level for new jobless claims was revised up by 8,000 to 2.446 million.
This brought the 10-week total for new unemployment claims to more than 40 million since the week ended March 20, when claims began totaling in the multi-millions due to the coronavirus pandemic.
Continuing jobless claims were 21.052 million for the week ended May 16, pulling back from the 24.912 million from the prior week and coming in below expectations for more than 25.6 million.
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7:42 a.m. ET: Abercrombie & Fitch posts wider than expected quarterly loss amid store closures
Abercrombie & Fitch posted a first-quarter adjusted loss of $3.90 per share, falling below estimates for a loss of $1.32 per share. The apparel retailer temporarily closed stores in mid-March outside of the Asia Pacific region, which dragged net sales down 34% over last year to $485.4 million.
Net sales at the Hollister brand dropped 36% to $273 million during the quarter, and Abercrombie sales fell 30% to $212.3 million.
The company said about half of its brick and mortar retail locations are currently open, and it “continues to reopen stores globally on a rolling basis.”
“With stores reopening in the U.S. and the EMEA [Europe, Middle East and Africa] regions, we have experienced sales productivity for reopened stores of approximately 80% and 60%, respectively, as compared to last year’s levels.”
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7:17 a.m. ET Thursday: Stock futures mixed ahead of jobless claims
S&P 500 futures (ES=F): 3,040.25, up 4.75 points (+0.16%)
Dow futures (YM=F): 25,669.00, up 135 points (+0.53%)
Nasdaq futures (NQ=F): 9,407.00, down 25.5 points (-0.27%)
Crude (CL=F): -$0.25 (-0.76%) to $32.56 a barrel
Gold (GC=F): +$14.10 (+0.82%) to $1,740.90 per ounce
10-year Treasury (^TNX): unchanged to yield 0.677%
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6:05 p.m. ET Wednesday: Stock futures roughly flat after rally
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:02 p.m. ET:
S&P 500 futures (ES=F): 3,035.50, flat
Dow futures (YM=F): 25,548.00, up 14 points (+0.05%)
Nasdaq futures (NQ=F): 9,423.25, up 1.75 points (+0.02%)
NEW YORK, May 26, 2020– Photo taken on May 26, 2020 shows the entrance to the New York Stock Exchange in New York, the United States. The New York Stock Exchange NYSE partially reopened its iconic trading floor on Tuesday after a two-month closure due to the COVID-19 pandemic. (Photo by Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images)
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