Stock Futures Slightly Higher Ahead of Weekly Jobless Claims

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Principal Points

• Wall Street futures aim to open to the upside, Dow futures higher by around 30 points
• Fed Vice Chairman Richard Clarida says the central bank could meet its goals by end of 2022

Futures contracts tied to the major stock averages are hovering in mildly positive territory on Thursday ahead of the opening. Dow Jones Industrial Average futures are pointing to the upside by about 30 points, while S&P500 futures are positive by around 0.10%. Nasdaq futures are little changed in pre-market trading today, up less than 0.10%.

Equity indexes on Wall Street in overnight trading aimed to improve their relatively weak performance from the regular session on Wednesday. The three benchmark indexes ended yesterday’s action mostly lower as investors weighed the latest Delta virus updates, coupled with a disappointing ADP jobs report related to private-sector hiring.

As the rate of vaccination across the US has declined about 80% from its April peak, states with low vaccination status are experiencing a sharp rise in confirmed cases. Florida, in particular, is becoming an epicentre of the current wave of infections.

“23% of new COVID hospitalizations in the U.S are in Florida, and their hospitals are being overwhelmed again,” White House Press Secretary Jen Psaki said on Wednesday on Twitter. “We are doing everything we can to help the people of FL, and they’re stepping up by getting vaccinated,” she added.

A sharp deceleration in job creation at private companies overshadowed an otherwise strong slew of economic updates in recent weeks. The private sector added 330,000 new positions for July, sharply lower than the June number of 680,000 new hires. The report also came below expectations of 653,000.

On Thursday, investors will receive the latest update on the US employment situation. Initial jobless claims for the past week released by the Labor Department will reveal whether worker shortages are increasing. The number could also serve as guidance for tomorrow’s key nonfarm payrolls report which is expected to show as much as 870,000 Americans found jobs in July.

Cautious Positivity for European Markets

Meanwhile, Federal Reserve Vice Chairman Richard Clarida said the US central bank is projected to meet its goals by end of next year. Speaking in a virtual appearance at the Peterson Institute for International Economics, Mr. Clarida said the Fed could start raising rates by 2023.

“Given this outlook and so long as inflation expectations remain well-anchored at the 2% longer-run goal … commencing policy normalization in 2023 would, under these conditions, be entirely consistent with our new flexible average inflation targeting framework,” he commented.

While he did not give an exact date when Fed officials could begin tapering asset purchases, he mentioned the Fed is on track to meet and exceed the 2% inflation target.

“If, as projected, core PCE inflation this year does come in at, or certainly above, 3%, I will consider that much more than a ‘moderate’ overshoot of our 2% longer-run inflation objective,” he also added.

Although the unemployment rate has dropped to 5.9%, a significant improvement from the pandemic high of 14.8%, there are still about 7.6 million fewer Americans in the labor market now than before the coronavirus crisis.

Overseas, European markets on Thursday are moderately in the green. The pan-continental Stoxx 600 hovers right above the flat line, as it aims to extend its record run. A day earlier, the broad-based index surged to a new all-time high of 468.22.

Cryptocurrencies today are trading muted with bitcoin lower by less than 1%. Ether is keeping steady near $2,700 as the coin’s blockchain, the Ethereum network, is slated for a major upgrade, called London, later today.