U.S. Stocks May Regain Ground Following Yesterday’s Pullback

Stocks are likely to see initial strength on Thursday, rebounding following the sharp pullback seen in the previous session. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 92 points.

The futures moved to the upside following the release of the Labor Department’s report on first-time claims for U.S. unemployment benefits in the week ended April 11th.

The report showed more than 5 million filed for unemployment last week, although that reflects a decrease from the more than 6 million that filed for the first time in the previous week.

The Labor Department said initial jobless claims dropped to 5.245 million, a decrease of 1.370 million from the previous week’s revised level of 6.615 million.

Economists had expected jobless claims to drop to 5.105 million from the 6.606 million originally reported for the previous month.

While more than 22 million people have filed for unemployment in recent weeks due to the coronavirus-induced shutdown, the drop in claims may be seen as an optimistic sign among some investors.

Meanwhile, the Commerce Department released a separate report showing a substantial decrease in new residential construction in the month of March.

The report said housing starts plunged by 22.3 percent to an annual rate of 1.216 million in March from a revised rate of 1.564 million in February.

Economists had expected housing starts to drop to a rate of 1.300 million from the 1.599 million originally reported for the previous month.

The Commerce Department said building permits also tumbled by 6.8 percent to an annual rate of 1.353 million in March from the revised February rate of 1.452 million.

Building permits, an indicator of future housing demand, had been expected to slump to a rate of 1.300 million from the 1.464 million originally reported for February.

A separate report from the Federal Reserve Bank of Philadelphia showed a substantial contraction in regional manufacturing activity in the month of April.

The Philly Fed said its diffusion index for current activity plunged to a negative 56.6 in April from a negative 12.7 in March, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to tumble to a negative 30.

However, the report said firms expect the current letup in manufacturing activity to last less than six months, as the broadest indicator of future activity strengthened further.

After falling sharply early in the session, stocks regained some ground over the course of the trading day on Wednesday but remained firmly negative. With the drop on the day, the major averages partly offset the strong gains posted on Tuesday.

The major averages all posted notable losses after ending Tuesday’s trading at their best closing levels in a month. The Dow plunged 445.41 points or 1.9 percent to 23,504.35, the Nasdaq tumbled 122.56 points or 1.4 percent to 8,393.18 and the S&P 500 plummeted 62.70 points or 2.2 percent to 2,783.36.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slumped by 1.3 percent, while Hong Kong’s Hang Seng Index fell by 0.6 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index has advanced by 1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.5 percent.

In commodities trading, crude oil futures are rising $0.25 to $20.12 a barrel after slipping $0.24 to $19.87 a barrel on Wednesday. Meanwhile, after plunging $28.70 to $1,740.20 ounce in the previous session, gold futures are jumping $16.50 to $1,756.70 an ounce.

On the currency front, the U.S. dollar is trading at 107.52 yen compared to the 107.46 it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0887 compared to yesterday’s $1.0910.

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