Thursday March 26th


Dow futures turn positive despite record jobless claims above 3 million

U.S. stock index futures cut earlier losses Thursday even after the release of initial jobless claims data gave investors a look at the economic impact the coronavirus is having on the country. Dow futures were up slightly around 9:05 a.m. along with Nasdaq 100 futures. S&P 500 futures traded marginally lower. Dow futures were down more than 400 points earlier in the session. The Labor Department said Thursday unemployment benefit claims soared to 3.28 million last week, a record. That number blew past the Great Recession peak of 695,000. “The fact that over 3.2 million people filed for unemployment benefits last week is both staggering and unprecedented,” said Chris Zaccarelli, CIO at Independent Advisor Alliance. “It is awful to see and represents what professional investors have been talking about for the past week.” However, the record-setting number was still better than some of the most dire estimates on Wall Street. Citi, for example, expected a spike to 4 million. Thursday’s moves came as the Senate unanimously approved a $2 trillion economic relief package late Wednesday, which aims to cushion the blow from the coronavirus outbreak. The stimulus bill now heads to the House, which will push to pass it by voice vote Friday morning as most representatives are out of Washington. The Dow was up more than 13% in two days for its first back-to-back gain since February in anticipation of the stimulus. The Senate rushed to pass the bill as data is expected to show a massive spike in unemployment claims after businesses shuttered to try to slow the outbreak’s spread. “What investors really need to gain confidence into repositioning for growth is data that suggests the … outlook for risks for the coronavirus itself are improving,” Todd Jablonski, chief investment officer of Principal Portfolio Strategies, told CNBC’s “Street Signs Asia” on Thursday morning Singapore time. “I think it’s key to not apply pre-crisis fundamentals against post-crisis prices to try to determine where value sits,” Jablonski said. Thursday’s decline follows the S&P 500 and Dow completing their first two-day winning streak since February. Wednesday’s gains extended Tuesday’s historic rally, which saw the Dow register its best day since 1933 and post its largest single-day point gain in history. Tuesday was the S&P 500′s best day since 2008. Stocks still have a lot of ground to make up for before returning to record highs. The Dow, S&P 500 and Nasdaq entered Thursday’s session down at least 24.9% from their respective all-time highs set last month. The Federal Reserve has stepped in in an effort to shore up the economy as the coronavirus outbreak and subsequent business slowdown continues to wreak havoc on global markets. Among other things, the central bank has slashed interest rates to near zero and announced an unprecedented quantitative easing program. Former Fed Chairman Ben Bernanke said Wednesday that current Chairman Powell has been “extremely proactive,” while noting that markets could still be in for steeper declines ahead. “It is possible there’s going to be a very sharp, short, I hope short, recession in the next quarter because everything is shutting down of course,” he said on CNBC’s “Squawk Box.” But he did sound an optimistic note, saying that there could also be a “fairly quick rebound.” Stocks in Asia were mixed on Thursday as investors awaited the release of U.S. jobless claims data expected later in the day stateside. Shares in Japan led losses among the region’s major markets, with the Nikkei 225 falling 4.51% to close at 18,664.60, while the Topix index shed 1.78% to end its trading day at 1,399.32. Mainland Chinese stocks slipped on the day, with the Shanghai composite 0.6% lower at about 2,764.91 and the Shenzhen composite shedding 0.799% to around 1,701.15. Hong Kong’s Hang Seng index also slipped 0.72%, as of their final hour of trading. South Korea’s Kospi finished its trading day 1.09% lower at 1,686.24. Oil prices fell on Thursday following three days of gains, with the prospect of rapidly dwindling demand due to coronavirus travel bans and lockdowns offsetting hopes a U.S. $2 trillion emergency stimulus will shore up economic activity. West Texas Intermediate (WTI) crude futures slipped 77 cents, or 3.1%, to $23.73 per barrel, while Brent crude futures fell 34 cents to trade at $27.05 per barrel. Gold steadied on Thursday, paring losses from a 1% dip earlier in the session, as the dollar’s rally faded and some safe haven buying returned on expectations of a huge jump in U.S. jobless claims due to the coronavirus pandemic. Spot gold was little changed at $1,612.14 per ounce.