Stock futures lower despite fall in U.S. jobless claims

U.S. stock-index futures fell early Thursday, while investors sift through economic data including the weekly jobless benefit claims report, after the stock market posted one of its best daily gains in weeks on Wednesday.

How are equity indexes performing?

Futures for the Dow Jones Industrial Average


were off 22 points, or 0.1%, at 29,069; those for the S&P 500 index


were off 16.20 points at 3,563, a decline of 0.5%; Nasdaq-100 futures


were down 140.50 points, or 1.1%, at 12,271.

On Wednesday, Dow

surged 454.84 points, or 1.6%, ending at 29,100.50, or 1.5% away from its Feb. 12 closing high of 29,551.42. The S&P 500 index

climbed 54.19 points, or 1.5%, to settle at a record 3,580.84, its 22nd record close this year. The Nasdaq Composite Index

advanced 116.78 points to close at a record 12,056.44, a gain of 1%, and its 43rd record close of the year.

What’s driving the market?

After a day of records for the S&P 500 and the Nasdaq Composite and the rapid of approach of the Dow to its own record, investors watched U.S. weekly jobless benefits claims data on Thursday morning.

Total new applications for unemployment benefits in the latest weekly period ending in Aug. 30 fell 130,000 to a seasonally adjusted 881,000 or lower than the consensus estimate of 940,000. This comes after the Labor Department said it tweaked its seasonal adjustment method amid the COVID-19 pandemic.

In other data, a revised reading of U.S. second-quarter productivity rose 10.1%, while the trade deficit widened to $63.6 billion.

Read: ADP says private sector added a less-than-expected 428,000 new jobs in August

Investors will also be watching a reading on the purchasing managers index in services from IHS Markit at 9:45 a.m. ET, and a survey by the Institute of Supply Management on activity in the service sector at 10 a.m. ET.

Market participants have been contending with a nearly incessant climb higher, with the focus on remedies for COVID helping to partially buttress the recent run-up. That said, Wednesday’s climb for stocks came even as large-capitalization technology-related stocks staged a pullback that didn’t disrupt the upward momentum of the broader equity market. Tech-related names have led the rebound of the market from coronavirus-lows but some strategists spotted encouraging signs that other areas beyond tech-related names were starting to rise.

“The more broad based this becomes, the more it signals a turning of the tide as far as the economic outlook is concerned, at least among those on Wall Street,” wrote Craig Erlam, senior market analyst at Oanda, in a daily research note.

However, there are concerns that market has climbed too far and too fast and that optimism over a vaccine for coronavirus is misplaced. The Centers for Disease Control and Prevention urged states to speed up approval for vaccine distribution sites by Nov. 1, which is just days before the presidential election.

Meanwhile, doubts about traction for further fiscal stimulus from Washington lawmakers has continued to haunt investors. Investors have been betting on Republicans and Democrats striking a deal later this month to offer additional relief to American consumers and businesses, after talks stalled in August. On Tuesday, House Speaker Nancy Pelosi said Democrats and Republicans still have “serious differences,” following a brief phone call.

Separately, tensions flared up between Beijing and Washington as the Trump administration signaled plans to impose new restrictions on Chinese diplomats in the U.S., citing Beijing’s use of similar measures on American envoys. The Chinese embassy in Washington responded by accusing the U.S. of violating international conventions.

Which stocks are in focus?
  • Michaels Cos. Inc. shares

    soared 6.7% in premarket trade, after the arts and crafts retailer blew past estimates for the second quarter as stores reopened after being closed during the pandemic.

  • Shares of Sanofi

    gained 0.4% before the bell after the drugmaker and GlaxoSmithKline

    said their COVID-19 vaccine candidate has entered a Phase 1/2 clinical trial.

  • Arconic Corp.

    said Thursday it restored the salaries and 401K match for all of its U.S. salaried employees, including executives on Sept. 1, after cutting them earlier this year to counter the impact of the coronavirus pandemic.

  • Shares of Designer Brands Inc.

    plummeted 19% in premarket trading Thursday, after the parent of the DSW Designer Shoe Warehouse retail chain reported a wider-than-expected fiscal second quarter

  • Facebook

    slipped after announcing Thursday it will ban new political ads from running in the week before the Nov. 3 presidential election.

How are other markets trading?

The 10-year Treasury note yield

edged 0.3 basis point higher to 0.653%. Bond prices move inversely to yields.

The ICE U.S. dollar index

, which tracks the performance of the greenback against its major rivals, was up 0.2%.

Gold futures

were down 0.4% to trade at $1,936.80 an ounce, on the New York Mercantile Exchange. U.S. benchmark crude futures

fell 2.2% to a one-month low of $40.61 a barrel.

The Stoxx Europe 600 index

rose 0.4%, while the U.K.’s benchmark FTSE

as up 0.5%. In Asia, Hong Kong’s Hang Seng index

fell 0.5% and China’s CSI 300

closed 0.6% lower. The Nikkei

rose 0.9%.

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Coronavirus cases are rising again in Europe and governments try desperately to avoid a return to brutal lockdowns. They may succeed

As European children return to their reopened schools this week, governments are still grappling with multiple second waves of the virus and tightening coronavirus-related restrictions to avoid having to resort to more radical measures.

– Europe can “conquer the pandemic” by learning to live with it without waiting for a vaccine, and can avoid going back to full economic and social lockdowns, World Health Organization regional director for Europe Hans Kluge said on Tuesday.

– Wearing masks in the workplace is compulsory in France, as the number of new cases has shot back to its record level since the height of the pandemic in March. Masks are also mandatory in the streets of most major French cities, including Paris.

– Tourism in Spain was down 75% in July compared with the same month in 2019, according to data released on Tuesday. And spending by international visitors was down 70% in the same month.

– Spain and France are by far the two countries in Europe where the number of new cases has risen fastest, but coronavirus infections are also up, albeit in smaller numbers, in Germany, Italy and the U.K.

– Attempts by German far-right protesters to storm the Bundestag, the country’s Parliament building, in anti-mask protests over the weekend, were condemned by politicians left and right, with the interior minister warning there would be “zero tolerance” for such acts.

– According to an article from the Johns Hopkins Bloomberg School of Public Health, although no less than 125 coronavirus vaccines are currently under development, little chance remains that one of them will prove effective before the end of 2021.

Read:Retail sales in the U.K. are back to their pre-coronavirus levels. Here’s why this may not last

The outlook: Although most European countries are facing new COVID-19 spikes, the number of deaths hasn’t been rising in similar proportions. Heading into the winter season, that seems to give governments some leeway to tailor their responses to the pandemic, and, notably, experiment with local restrictions. Still, governments such as France’s or the U.K.’s are warning that they may not be left with much choice other than returning to economically devastating general lockdowns if the virus keeps spreading. That in turn depends on the governments’ own credibility, and the trust they inspire – or not – among their citizens.

Read: Japanese Prime Minister Abe’s resignation shocks the markets but what happens next depends on his successor

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What Trump’s payroll tax order means for your paychecks this year (and next year) and why you shouldn’t expect air travel to get cheaper even if airlines scrap flight change fees

Happy Tuesday MarketWatchers. Don’t miss these top stories:

Airlines are getting rid of flight change fees — but don’t expect air travel to get any cheaper

‘Just because airlines have eliminated change fees doesn’t mean we’re about to enter a new golden age of travel.’

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Salesforce CEO Marc Benioff said about one-third of the firm’s employees reported experiencing a mental-health issue.

‘I tried walking more than 3 blocks, paying the price with chest pains and crippling fatigue’: One woman’s long-haul recovery from COVID-19

‘Sure, I had my life back, but it wasn’t my life. It was someone else’s life.’

It seemed safe to reopen Israel’s schools, but then came COVID-19 outbreaks — what can the U.S. learn from those mistakes?

After a strict lockdown in February, Israel reduced new daily coronavirus cases to double digits by May, leading the country to reopen schools. Now it’s trying again.

My roommate tested positive for COVID-19. The nursing home where I work told me to come in and get a nasal swab. I’ve refused

More than 3,400 nursing homes in the U.S. have been cited for noncompliance with infection-control requirements and/or failure to report COVID-19 data.

My friends’ wedding was canceled due to coronavirus. They’re having a small ceremony next month with only close friends and family. Do I still send a gift?

‘The wedding itself was put off because of the coronavirus pandemic.’

‘A man cave on wheels’: My husband’s RV is his pride and joy — but he owes $75,000 on it. If he dies, am I liable?

‘My concern is that, if something happens to him, I will end up with a lien on my home.’

41 states have been approved to offer $300 extra in unemployment benefits — here are the 6 that have started to distribute it

An executive order by President Donald Trump called for distributing an additional $300 in weekly unemployment benefits from a $44 billion fund set aside for disaster relief.

Trump’s payroll-tax executive order could mean bigger paychecks this year — but 2021 is a different story

Employers ‘should be ready to answer questions, because they are going to get them.’

This graduate degree will be a job magnet as the world recovers from COVID-19

MBA holders will be in demand in the post-pandemic global economy.

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Markets are bracing against risk of U.S. inflation surpassing 2% next year. Here’s how it could happen

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White House’s Meadows says Senate aiming to unveil new coronavirus bill next week

Senate Republicans are aiming to unveil a new “targeted” coronavirus aid bill next week once lawmakers return from a break, a senior White House official and a Wyoming senator said Tuesday.

Brainard says Fed should shift to more aggressive strategy to boost the economy

Federal Reserve Governor Lael Brainard on Tuesday said the central bank should “pivot” to providing more support for U.S. growth in the months ahead after a flurry of unprecedented moves earlier in the year to stabilize the economy once the coronavirus epidemic broke out.

Today’s Massachusetts primary contests: Sen. Ed Markey takes on a Kennedy, plus ‘a key race to watch for investors’

Massachusetts voters on Tuesday are casting their ballots in closely watched Democratic primaries, with Sen. Ed Markey facing a Kennedy in one race, while another could end the career of a powerful House chairman.

U.S. manufacturers grow fourth month in a row, ISM finds, but they aren’t bringing all their workers back

American manufacturers grew again in August for the fourth straight month, but companies still aren’t bringing back lots of workers or seeking to invest with the coronavirus pandemic still weighing heavily on the economy. The Institute for Supply Management said its manufacturing index rose to 56% in August from 54.2%.

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Mohamed El-Erian, Allianz’s chief economic adviser, explained in an op-ed for the Financial Times how action in the options market should be taken as a warning by retail investors who have been cashing in on the stock market’s relentless push higher.

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Here’s what could trigger more stock market pullbacks this year, says Schwab trading pro

A record-setting August for stocks has set the bar high, and September looks off to a promising start, at least for technology stocks, with electric-car maker Tesla

poised for more big gains.

That brings us to our call of the day from Schwab Center for Financial Research’s vice president of trading and derivatives, Randy Frederick, who thinks the stock market may finally deliver on some much-needed corrections.

“Obviously these things are difficult to pinpoint, but a 2%-3% decline sometime in the next couple of weeks wouldn’t be at all surprising to me. I continue to believe that the SPX

[S&P 500] can reach 3,700 (+14.5%) by year-end, but probably not without three or four small pullbacks along the way,” he told MarketWatch in an interview and follow-up email.

“We haven’t had anything of that nature at all since going all the way back to early June, when we had that big drop-off. We’re clearly way overdue on that,” Frederick said. And while 3,700 sounds “pretty remarkable from a bottom-of-the-virus return,” on a year-to-date basis that 14% gain for the S&P 500 is fairly average, he noted.

When those smallish pullbacks come along, though, he advises against panic (he urged no panic in early March too), saying “they will be and should be used as buying opportunities.” That is because there is nowhere else for investors to put their money as any Federal Reserve interest rate increase is years out, said Frederick. And investors should learn from those who panicked out of the market in 2008 and missed out on an 11-year bull market, he added.

One potential correction trigger is technical, as he says 2020 has been closely tracking the action in 2009. That year saw three pullbacks — 3.5%, 4.3% and 5.6% in the last few months of 2009 — as his chart shows:

A “substantial pullback in earnings could also trigger a pullback,” he said, noting that second-quarter S&P 500 earnings per share came in far better than expected.

Frederick is watching the coronavirus pandemic as a potential trigger, with schools opening across the country and the potential for a dramatic uptick in the case count spooking markets, while trade issues with China shouldn’t be dismissed, as they also have the power to unhinge markets.

Another stick of dynamite for stocks is continued wrangling over enhanced unemployment benefits in the U.S. “That’s a big issue that needs to be resolved on what they should do to support workers and small business going forward,” said Frederick.

Read: Investors may be betting the wrong way on the U.S. election, says JP Morgan

The market


futures are tearing higher, with Dow

futures up modestly. European stocks

are mixed, with the euro

at a two-year dollar high. Gold

and oil

are up, and Asian stocks were mixed.

The buzz

Tesla’s premarket climb has been slowed by news it will sell up to $5 billion worth of its stock. Also, an analyst said the electric-car maker is “fundamentally overvalued.”

Shares of Zoom

are surging, after the videoconferencing group soundly beat forecasts. Companies paid up for the service.


reportedly ordered 75 million 5G iPhones, and shares are up.

Retailer Walmart

is launching a $98 a year membership program offering fuel discounts and free shipping, to perhaps rival Amazon Prime

An update on manufacturing from U.S. purchasing managers, construction spending and automobile sales are ahead. China delivered stronger-than-expected manufacturing numbers.

President Donald Trump has defended his decision to visit Kenosha, Wis., on Tuesday, and offered up a defense of the teenager who shot two protesters. Democratic rival Joe Biden accused him of making things worse. A shooting in Los Angeles late on Monday has also drawn protesters.

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Belarusian opposition leader says protesters are vanishing.

Don’t miss the Corn Moon.

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An ‘extreme’ August on the stock market might be telling us something about the November election

August marked the best month for the S&P 500

since 1986 and for the Nasdaq Composite

since 2000.

But it’s a new month and autumn and winter are coming, with a U.S. election race starting to heat up and the COVID-19 battle and all that comes with it. That brings us to our call of the day, from BTIG’s chief equity and derivatives strategist Julian Emanuel, who says an extremely strong August for stocks — the S&P 500 is up 7.2% through Aug. 28 — could be telling us something about who wins the White House in November.

“At first glance, August strength plays well into Donald Trump’s reelection — in the three months prior to November elections, positive S&P 500 returns have accompanied incumbent party presidential victories 85.7% of the time,” Emanuel tells clients in a note.

But going back to 1928, when stocks rose 5% or more in August, and the June to August return was top 25%, the market often struggled in September and October. “And when the S&P 500 is down from the end of August through the Election, the incumbent party has lost the White House on all six occasions,” he notes.

Raising the stakes further, is notes political, social, public health and economic uncertainty against ”a Nasdaq-100 arguably in the midst of a potentially a “blowoff” top move” — a fast and high climb followed by a sharp drop. But he says it is hard to tell if we’re at the start, middle or end of that.

That is laid out by his chart of the Nasdaq-100

and the Cboe NASDAQ-100 Volatility Index (VXN), a key measure of market expectations of implied swings in the tech-heavy gauge.

“The last time both NDX and VXN rose together to this degree was January 2018, prior to the period known as ‘Volmageddon,’ which was when Wall Street’s so-called fear gauge — the Cboe Volatility Index

surged to a level not seen in 20 years.

His advice: own calls — a bullish bet on an asset that gives an investors the right but not obligation to buy the underlying asset a certain price by a specific date — on the Invesco QQQ

exchange-traded fund that tracks the Nasdaq-100 Index. He also suggests owning puts — a bearish bet that works the opposite of calls — on the iShares Russell 2000 ETF

The chart

Goldman Sachs says year-to-date, 43% of female-managed funds have outperformed their benchmarks versus just 41% of those with no female managers.

A team led by Goldman’s chief U.S. equity strategist David Kostin explains: “Men may be from Mars and women from Venus, but female-managed funds tilt toward info tech while non-female managed funds prefer financials.”

Read more here

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Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

Follow MarketWatch on Twitter, Instagram, Facebook.

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