The Thursday Market Minute
- Wall Street powers higher, setting up the first daily gain in four sessions, following the ECB’s tapering decision and better-than-expected weekly jobless claims.
- Global stocks slipped lower, however, as Delta infection surge blunts growth prospects and central bank policy paths remain uncertain.
- China reports the fastest factory gate inflation data in 13 years as input costs surge amid the August export rebound.
- Benchmark 10-year note yields rally to 1.327% after a home-run auction of $38 billion notes that drew near record highs in foreign demand.
- Oil prices slide as China’s move to auction strategic reserves offsets American Petroleum Institute data shows a 4 million barrel decline in domestic crude stocks.
U.S. stocks traded higher Thursday, reversing earlier pre-market losses and setting up the first gain in four sessions, following stronger-than-expected weekly jobless claims and an expected decision on bond purchase tapering from the European Central Bank.
Stocks pared earlier declines after the ECB made modest — and expected — changes to the pace of its pandemic bond buying program, but kept its three main interest rates unchanged following a two-day policy meeting in Frankfurt.
Jobless claims data were also in focus, with new applications for unemployment benefits falling 35,000 to a new post-pandemic low of 310,000 over the week ending September 4.
The twin releases acted as a counterweight to signs of a pullback in the post-pandemic recovery and uncertainty linked to the policy path of major central banks around the world.
Slowing employment growth, as well as the ongoing surge in Delta-variant infections and limp consumer spending, set against the rich valuations of near-record high indices on Wall Street, has triggered a series of downgrades for near-term performance from major investment banks including Morgan Stanley, whose chief investment officer, Lisa Shalett, forecast a correction of between 10% and 15% for U.S. stocks by the end of the year.
President Joe Biden will present a six-point plan to combat the highly-contagious Delta variant at a press briefing Thursday that could include mask mandates, testing and new policies for schools as COVID-19-related deaths rise past 1,500 for the first time since March and daily infections surging past 150,000 for the first time in more than a year.
Warnings from American Airlines and United Airlines , both of which forecast softening passenger bookings — that will likely lead to third quarter losses — as a result of the COVID infection surge underscored that concern.
Video: Delta variant surge weighs on markets and cyclical stock sectors (CNBC)
Investors are also attempting to predict the timing of central bank support withdraws after with an ECB decision that could have implications for Federal Reserve tapering in the coming weeks.
Still, the Dow Jones Industrial Average was marked 100 points higher in the opening hours of trading, while the broader S&P 500 added 9.5 points while the Nasdaq Composite gained 58 points.
Lululemon shares were active in early trading after the sports apparel retailer posted stronger-than-expected second quarter earnings and boosted its full-year profit outlook. Shares in the group were marked 12% higher at 426.87 each after hitting an all-time high of $434.22 each earlier in the session.
GameStop shares, however, slumped 9.8% to a three-week low of $179.00 after the video game retailer and meme stock investor favorite posted a wider-than-expected second quarter loss while remaining silent on plans to grow the struggling business over the second half of the year.
General Motors shares were also in the red, falling 1.4% after the carmaker extended the shutdown times of several north American plans amid the ongoing shortage in global semiconductor supplies and the recall of its Chevy Bolt battery.
Benchmark 10-year note yields rallied to 1.327% following a solid auction of $38 billion in re-opened notes that drew one of the best rates of foreign demand on record yesterday.
Oil prices, meanwhile, bumped higher after the American Petroleum Institute reported a 4 million barrel decline in domestic crude stocks late Wednesday, but reverse course to take WTI October futures 34 cents lower at $69.01 per barrel after China said it would release some of its strategic reserves for public auction.
In overseas markets, tech and video game shares slumped lower in China amid reports that officials in Beijing have suspended the approval of new video game releases amid concerns for their affect on young people.
The South China Morning Post reported the suspension following a meeting with officials from Tencent Holdings and NetEase, two of the country’s biggest video game producers, that followed a ban on under 18s from playing the games for more than three hours a week.
The region-wide MSCI ex-Japan benchmark was marked 1.3% lower heading into the final hours of trading while Japan’s Nikkei 225 snapped a three-day winning streak to close 0.57% lower at $30,008.19 points.
This article was originally published by TheStreet.