US Stock Market Overview – Stocks Drop on Surge in Claims, Oil Continues to Rally

US stocks moved lower on Thursday driven down by declines in cyclicals and communications, despite much better than expected earnings on Wednesday evening from Facebook and Microsoft. While both stocks moved higher in the aftermarket, they were unable to hold the strong gains as the month drew to an end. A round of profit-taking in conjunction with a larger than expected rise in jobless claims weighed on stock prices. Chicago PMI data came in worse than expected ahead of Friday’s ISM manufacturing report. EU GDP also crashed falling more than 3% quarter over quarter.

 

US Jobless Claims Surge

US Jobless claims surged by 3.84 million last week according to the Labor Department. This compares to expectations that initial claims would rise by 3.5 million. Jobless claims for the week ended April 25 came in at the lowest level since March 21 but bring the rolling six-week total to 30.3 million as part of the worst employment crisis in U.S. history. Claims hit a record 6.87 million for the week of March 28 and have declined each week since then. Last week’s initially reported figure was revised up by 15,000 to 4.4 million.

PMI Data Crashes

Ahead of Friday’s national PMI reports from the Institute of Supply Management the Chicago area released the last of the regional surveys. Chicago region fell sharply to 35.4 in April, it’s the lowest reading since 2009.

EU GDP Contracted Sharply

Eurozone Q1 GDP declined more than expected, dropping -3.3% year over year and -3.8% quarter over quarter. This is the worse quarterly print since the single currency was created, and Q2 will be even worse. France’s GDP came in at -5.8% quarter over quarter and -5.4% year over year and Spain’s at -5.2% quarter over quarter and -4.1% year over year, all much weaker than expected.