U.S. Stock Market

U.S. Stocks Set To Open Lower As Economy Continues To Lose Jobs

Initial Jobless Claims

The U.S. Initial Jobless Claims report has just been released. It showed that 3.84 million Americans filed for unemployment benefits last week, higher than the analyst consensus of 3.5 million.

Continuing Jobless Claims were lower than expected at 17.99 million. Since the beginning of the crisis, more than 30 million Americans filed for unemployment benefits.

Clearly, this is an unprecedented disruption of the job market. However, the equity market has previously managed to shrug off the bad news. Currently, S&P 500 futures are indicating a lower open of about -0.5% but things may change quickly.

In addition to the employment data, U.S. has also released Personal Income and Personal Spending reports. Both came below expectations at -2% and -7.5% respectively.

The Fed Left Rates Unchanged And Signaled That Economic Recovery Might Be Gradual

Yesterday, the U.S. Federal Reserve decided to leave the interest rate unchanged. This was not a surprise since an additional rate cut would have put the rate into the negative territory.

In this light, the market focused on Fed’s commentary. On the positive side, the Fed promised to support the economy as long as necessary and also hinted that it was not out of ammo to do so.

For now, the Fed will have to wait a bit to see how the measures that have already been implemented impact the economy.

On the negative side, the Fed stated that the near-term blow to the economy was very heavy, and that the current situation also presented risks for the medium term.

Big Tech Earnings Reports May Provide Support To The Market

Earlier, I wrote about good earnings reports from Tesla, Facebook and Microsoft. The rebound from mid-March levels was very strong, and the market certainly needs good reports from big-cap companies to continue the upside trend.

With no new measures announced by the Fed, solid reports from big companies could serve as the main catalyst for market upside in case investors and traders are willing to buy stocks at current levels.

The economic data looks very grim, and it remains to be seen whether the market will continue to ignore the economic reality which will hurt second-quarter results of most companies.