U.S. Stocks Set To Open Lower Despite Solid Retail Sales Growth

Continuing Jobless Claims Decline To 17.34 Million

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

Initial Jobless Claims report showed that 1.3 million Americans filed for unemployment benefits in a week. Analysts expected Initial Jobless Claims of 1.25 million.

Meanwhile, Continuing Jobless Claims declined from 18.1 million to 17.3 million. The report was better than the analyst consensus of 17.6 million.

I’d note that Initial Jobless Claims remain stubbornly high but Continuing Jobless Claims are showing signs of improvement which means that some people who lost their jobs were able to find new employment opportunities.

S&P 500 futures are under pressure in the premarket trading session after the release of employment reports. Most likely, the market needs more catalysts to continue the current upside trend since stocks are at very high levels.

Retail Sales Report Shows Solid Growth

U.S. Retail Sales grew by 7.5% month-over-month in June compared to analyst consensus which called for growth of 5%. On a year-over-year basis, Retail Sales increased by 1.1%.

A recent Reuters report suggested that people were spending more thanks to generous unemployment benefits so the strength of Retail Sales is not suprising.

In my opinion, the market will start evaluating the future scenario when the support from generous unemployment benefits will come to an end.

China GDP Grows By 3.2% Year-Over-Year In The Second Quarter

China GDP gained 3.2% in the second quarter after contracting by 6.8% in the first quarter. This news put pressure on Asian markets and also impacted the early trading of S&P 500 futures as traders hoped for bigger growth.

Retail Sales declined by 1.8% year-over-year in June while analysts expected that the report will show growth. China was the first country which was hit by coronavirus so analysts and traders watch its economic data closely to evaluate the potential recovery path for other countries.

The slowdown in consumer activity will be more problematic for developed Western countries which heavily rely on the services industry which was severely hit by coronavirus-related restrictions.

At this point, economic data from China does not promise a swift recovery of consumer activity. However, investors should keep in mind that China focused on helping industries rather than on providing direct support to citizens.

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