Stock exchange traded funds (ETFs) are mixed early Thursday as investors digest the Labor Department jobless claims data that came in short of expectations.
New claims for unemployment benefits fell last week, but not enough to assuage fears the labor market recovery has taken a step back. Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 422,000, the Labor Department said on Thursday, less than economists’ expectations for a fall to 415,000. “Every indication we have had so far points to a slightly softer labor market in the U.S.,” said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto. The SPDR S&P 500 ETF (NYSEArca: SPY) is trading flat early Thursday.
Retailers reported muted May revenue growth as bad weather and worry over the rising cost of living held back shoppers’ demand for spring and summer merchandise. After a strong spring, consumers seemed to be shrugging off rising prices. But stores are now reporting that their shoppers are finally feeling the pain of rising prices for food like dairy and meat and gas prices that are more than $1 higher per gallon than a year ago. Higher costs are “finally taking a bite and affecting sales,” said Ken Perkins, president of research firm Retail Metrics. “It definitely raises the caution flag going into the summer.” Of 24 retailers, about 60% missed expectations and 40% beat expectations, according to a poll by Thomson Reuters. The SPDR S&P Retail ETF (NYSEArca: XRT) is down almost 1% so far today.
Oil prices bounced back above $100 a barrel as a weakening dollar outweighed an unexpected jump in U.S. crude supplies, suggesting demand is weakening. The weaker dollar — which makes crude cheaper for investors with other currencies — helped sustain prices despite rising U.S. stockpiles. The American Petroleum Institute said late Wednesday that crude inventories rose 3.5 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.9 million barrels. The Oil Services HOLDRs (AMEX: OIH) rose more than 1% in early trading.
London equities sank on Thursday, after large losses in Asia, as concerns grew over weak global economic data that has cast a dark cloud over world financial markets. “Worry is creeping in amongst the ranks of investors as the raft of economic data sets alarms bells over the state of the global economy ringing,” said Capital Spreads analyst Simon Denham. Markets were dealt another blow after Moody’s rating agency again downgraded Greek debt and gave it a negative outlook, raising the stakes in rescue negotiations for the troubled eurozone member nation. The iShares MSCI United Kingdom Index (NYSEArca: EWU) is trading flat early Thursday.
Gregory A. Clay contributed to this article
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.