U.S. Stocks Set To Open Lower As Initial Jobless Claims Are Higher Than Expected

Continuing Jobless Claims Stay Above 20 Million

The U.S. has just released new Initial Jobless Claims and Continuing Jobless Claims reports.

Initial Jobless Claims report showed that 1.5 million Americans filed for unemployment benefits in a week, above analysts’ expectations of 1.3 million.

Continuing Jobless Claims were also higher than expected at 20.5 million.

S&P 500 futures are pointing to a lower open after the release of the employment reports.

Central Banks Continue To Support Global Markets

The Bank of England has decided to increase its bond purchase program by 100 billion pounds, a move that was widely anticipated by analysts. At the same time, the Bank of England kept the interest rate unchanged at 0.1% as it did not want to take the rate into the negative terrritory.

In Switzerland, the Swiss National Bank cut its inflation outlook and kept the interest rate at -0.75% as it continued to support the economy at times of coronavirus crisis.

As the world central banks, including the U.S. Federal Reserve, continue to expand their asset purchase programs and keep rates at very low levels, the financial markets receive continued support.

There is still plenty of time left before the second quarter earnings season begins, and the main risk for the market right now is the return of virus fears.

Will Fears About The Second Wave Push S&P 500 Below 3000 Again?

The market has mostly ignored virus data on its way up. However, the stocks got more expensive during the recent rally, and it is clear that the potential second wave of coronavirus is not priced in.

It is not surprising that we’ve seen some nervousness in the market in recent days due to a new outbreak in China’s Beijing and a rise in the number of coronavirus cases in some U.S. states.

The stocks are close to levels seen at the beginning of this year while the economic situation is much worse. In fact, the economy will likely get to pre-pandemic levels only in 2022.

I expect that stocks will get more sensitive to virus news in the upcoming weeks, but the unprecedented support from the world central banks may still push them to new highs regardless of the actual situation on the healthcare and economic fronts.

For a look at all of today’s economic events, check out our economic calendar.