Stocks listless after unexpected jump in jobless claims

Wall Street posted marginal gains on Thursday, with traders unsettled by an unanticipated rise in unemployment, threatening a 2-day rally that wiped out losses sustained during the worst trading day of 2021. 

Sentiment took a hit after an unexpected jump in jobless claims, which last week set a fresh pandemic-era low. New unemployment filings jumped to 419,000 in the latest week, well above consensus estimates of 360,000.

Since the onset of COVID-19, the data series has served as an avatar of the labor market’s health, and could take on new importance if rising infections start to trigger new restrictions — which may lead to another round of job losses.

On Wednesday, stocks completed a 2-day hot streak, in an attempt to calibrate a resurgence of COVID-19 cases against a red-hot economic expansion that continues to gain momentum. In the process, strong earnings have helped the market heal from Monday’s pandemic-inspired meltdown, with investors looking at the fundamentals rather than surging coronavirus numbers.

Industry bellwethers Netflix (NFLX), Chipotle (CMG), Coca-Cola (KO), Johnson & Johnson (JNJ) and Verizon (VZ) topped market expectations, boosting a market that’s seen precious little downside in recent months. The sell-off that began the week was the year’s worst trading day, and spooked traders that had become “spoiled” by a seemingly endless series of win streaks.

“The truth is investors have been very spoiled by the recent stock market performance,” LPL Financial chief market strategist Ryan Detrick wrote on Wednesday. 

“Incredibly, we haven’t seen as much as a 5% pullback since October. Although we firmly think this bull market is alive and well, let’s not fool ourselves into thinking trees grow forever. Risk is no doubt increasing as we head into the troublesome August and September months,” he added.

Netflix, however, bucked the market’s trend. It beat analysts’ expectations for new subscribers in Q2, but fell short of the target for estimates for Q3. On Wednesday, the stock saw its worst day in three months, tumbling by more than 3% as markets registered their disapproval over its mixed results.

Monday’s selloff momentarily took the spotlight from quarterly earnings that have almost uniformly reflected a strong rebound. The rising case count driven by the Delta variant — a more communicable form of COVID-19 — pushed the Dow (^DJI), Nasdaq (^IXIC) and S&P 500 (^GSPC) to their biggest drop in months.

However, investors are reconsidering some of that pessimism, with some analysts pointing out that hospitalizations and deaths haven’t risen as dramatically — and are far below where they were during the worst days of the COVID-19 outbreak. 

“The market is playing this collective game of chicken right now,” CIC Wealth executive vice president Malcolm Ethridge told Yahoo Finance Live. “We all collectively agree that we can’t go on this way for much longer. There’s no obvious catalyst.”

Investors are also watching cryptocurrencies, after billionaire Elon Musk— in a surprising U-turn — said that Tesla (TSLA) will likely start accepting bitcoin (BTC-USD) again for vehicle purchases. In May, Musk sent shockwaves through the digital coin market when he walked back his support for using the currency in Tesla transactions. Bitcoin was up over 1% in early U.S. trading on the news.

9:30 a.m. ET: Wall Street flat after unemployment claims rise

Here’s where major benchmarks stood at the opening bell:

  • S&P 500 (^GSPC): 4,363.52, +4.83 (+0.11%)

  • Dow (^DJI): 34,786.95, -11.05 (-0.03%)

  • Nasdaq (^IXIC): 14,670.75, +38.79 (+0.27%)

  • Crude (CL=F): $71.00 per barrel, +$0.70 (+1.00%)

  • Gold (GC=F): $1,795.00 per ounce -$8.40 (-0.47%)

  • 10-year bond (^TNX): +0.1bps yielding 1.293%

9:00 a.m. ET: Uber buys Transplace for $2.25B as transport ambitions take shape

Uber’s (UBER) freight unit on Thursday announced a deal to buy Transplace for $2.25 billion from private equity firm TPG, as part of the ride sharing pioneer’s vision to compete more robustly in the transportation and logistics sector. 

From the release:

[The deal] will create an industry-leading combined Freight Technology Operating System to enable a comprehensive end-to-end shipper-to-carrier solution, unlocking new levels of efficiency and service. 

This transaction is expected to accelerate Uber Freight’s path to profitability and help the segment to break even on an Adjusted EBITDA basis by the end of 2022.

Uber’s stock is down modestly pre-market action, trading above $47 per share. 

8:30 a.m. ET: Jobless claims jump after setting pandemic-era low

Job seekers prepare for career fair to open at Rutgers University in New Brunswick, New Jersey, January 6, 2011. New claims for jobless benefits moved higher last week, but a decline in the four-week average to a nearly 2-1/2-year low suggested the labor market continues to improve. REUTERS/Mike Segar (UNITED STATES – Tags: EMPLOYMENT BUSINESS)

An unexpected setback for market sentiment as the ranks of the unemployed swelled unexpectedly in the latest week, even as Wall Street expects July employment to show continued strength. Initial claims for state unemployment benefits increased 51,000 to a seasonally adjusted 419,000 for the week ended July 17, the Labor Department said on Thursday.

There may be some noise in the data, but it’s clearly a drag on sentiment, with stock futures losing steam after the data. As of the moment, Wall Street is poised for a slightly higher opening.

7:20 a.m. ET: Thursday: Futures show strength

Here were the main moves as of 7:20 a.m.:

  • Dow futures (YM=F): 34,758.00, +69.00 (+0.20%)

  • Nasdaq futures (NQ=F): 14,851.75, +24.00 (+0.16%)

  • S&P 500 futures (ES=F): 4,358.25, +7.75 (+0.18%)

  • Crude (CL=F): $71.00 per barrel, +$0.70 (+1.00%)

  • Gold (GC=F): $1,795.00 per ounce -$8.40 (-0.47%)

6:10 p.m. ET Wednesday evening: Stock futures rise

Here were the main moves in markets, as of 6:10 p.m. ET:

  • Dow futures (YM=F): 34,716, +27

  • Nasdaq futures (NQ=F): 14,832, +4.25

  • S&P 500 futures (ES=F): 4,325, +2.75

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Javier David is an editor for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

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