Stock futures were lower after a selloff during the regular session Wednesday sent the Nasdaq back into negative territory for the year to date. The Labor Department’s weekly report on new jobless claims showed another 2.981 million individuals filed for first-time unemployment benefits last week, or more than had been expected.
On Wednesday, the S&P 500 closed at its lowest level since April 23, amid a rising chorus of warnings from economists and officials over the outlook for the virus-stricken economy, as well as signs of lingering tensions between the U.S. and China.
Remarks Wednesday morning from Federal Reserve Chair Jerome Powell spooked investors, as he raised the specter that “lasting damage” may be done to the U.S. economy in the wake of the coronavirus pandemic. The U.S. may need additional stimulus on both the monetary and fiscal policy fronts to ward off a deeper and more destructive downturn.
Powell also said he expected that unemployment would peak “over the course of the next month or so,” after the jobless rate surged to a record high of 14.7% in April, based on Bureau of Labor Statistics monthly data. He noted that those on the lower end of the income spectrum have borne the brunt of the declines, with the Fed finding nearly 40% of people in households making under $40,000 a year lost their jobs in March.
Economists at major firms have issued increasingly grim outlooks on the economic outlook in the near-term. Goldman Sachs economists said in a note Wednesday they anticipate the unemployment rate will peak at 25%, up from their previous estimate of 15%. In a similar downgraded forecast, Nomura economists said in another note Wednesday they now believe second-quarter U.S. gross domestic product “will be about 16.0% below its level in Q4 of last year, compared to a decline of 12.5% in our previous forecast.”
Others, however, have highlighted data showing areas of the economy that are moving in a direction of “less bad,” rather than worsening, as the outbreak progresses.
In a new report Wednesday, Bank of America said its daily credit and debit card data for May “showed meaningful improvement” in card spending relative to the doldrums of March, “driven by the lower income population.” Total card spending was running at a -10% pace over last year between May 3 and 7 – which, while still negative, was an improvement from the -36% year over year trend seen during the last 5 days of March, the analysts said.
The analysts attributed this to stimulus payments authorized by Congress and a phased reopening of the economy in some states, along with a greater number of individuals receiving benefits after filing jobless claims.
Meanwhile, corporate earnings season continued on Wednesday. Cisco (CSCO) shares rose in late trading after the company guided toward a shallower drop than expected in sales over last year for the current quarter.
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8:30 a.m. ET: New unemployment claims totaled 2.981 million for the week ended May 9
Initial unemployment claims came in at 2.981 million for the week ended May 9, the Department of Labor said in its weekly report Thursday morning.
Consensus economists expected claims to have totaled 2.5 million for the week, according to Bloomberg consensus data.
The prior week’s new unemployment insurance claims were slightly upwardly revised to 3.176 million.
Continuing unemployment claims rose to a fresh record of 22.833 million for the week ended May 2. This was slightly below consensus expectations for a rise to 25.12 million. The prior week’s continuing unemployment insurance claims were revised down slightly to 22.377 million.
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7:20 a.m. ET: Norwegian Cruise Line Holdings says it expects net losses for the second quarter, full-year 2020
Norwegian Cruise Line Holdings (NCLH) posted a first-quarter net loss of $1.9 billion, versus net income of $118.2 million in the same quarter last year, after the coronavirus pandemic hit the cruise industry especially hard. The losses came as cruise operating expenses jumped by more than one-fifth over last year, due to factors including the costs of suspending cruise voyages.
First-quarter revenue of $1.2 billion fell 11.2% over last year, Norwegian said.
Norwegian added it expects to post a net loss for both the second quarter and the full year in 2020, and estimates its monthly cash burn to be, on average, in a range of $120 million to $160 million per month while operations are suspended.
Still, Norwegian added, “There continues to be demand for cruise vacations particularly beginning in the fourth quarter 2020 accelerating through 2021 with the Company’s overall booked position and pricing for 2021 within historical ranges.”
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7:09 a.m. ET Thursday: Stock futures mostly lower ahead of jobless claims report
Here were the main moves in markets, as of 7:10 a.m. ET:
S&P 500 futures (ES=F): down 1.25 points, or 0.04%, to 2,811.75
Dow futures (YM=F): down 31 points, or 0.13%, to 23,135.00
Nasdaq futures (NQ=F): up 7.25 points, or 0.08%, to 8,999.5
Crude (CL=F): +$1.13 (+4.47%) to $26.42 a barrel
Gold (GC=F): +$7.20 (+0.42%) to $1,723.60 per ounce
10-year Treasury (^TNX): -4.1 bps to yield 0.61%
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6:01 p.m. ET Wednesday: Stock futures rise
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:01 p.m. ET:
S&P 500 futures (ES=F): up 9.75 points, or 0.35%, to 2,822.75
Dow futures (YM=F): up 107 points, or 0.46%, to 23,273.00
Nasdaq futures (NQ=F): up 36.75 points, or 0.41%, to 9,029.00
NEW YORK, NY – MAY 13 : People wearing protective masks walk past a closed outdoor seating for Nathan’s restaurant on May 13, 2020 in the Coney Island neighborhood in the Brooklyn borough in New York City. New York City is currently in its ninth week of lockdown and governmental guidelines on wearing a mask in public and social distancing are in effect. (Photo by Stephanie Keith/Getty Images)
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