US open: Stocks record early gains, shrug off jobless figures
By Iain Gilbert
Date: Thursday 28 May 2020
(Sharecast News) - Stocks opened a touch higher on Thursday as market participants tried to remain optimistic about the reopening of the US economy despite a dire jobless claims report and some weaker-than-expected gross domestic product numbers.
As of 1535 BST, the Dow Jones Industrial Average was up 0.22% at 25,605.64, while the S&P 500 was 0.28% firmer at 3,044.62 and the Nasdaq Composite started out the session 0.29% stronger at 9,439.79.
The Dow opened 57.37 points higher on Thursday, continuing gains recorded in the previous session as optimism regarding the reopening of the economy and a potential Covid-19 vaccine offset fears around a heightening of tensions between the world's two largest economies.
Thursday's primary focus was this week's weekly initial jobless claims report from the Labor Department which revealed that firings in the US had continued at a furious pace, albeit at a moderately slower pace, while hirings picked up for the first time since the pandemic.
According to the Department of Labor, the rate of initial unemployment claims fell by 323,000 over the week ending on 23 May to reach 2.123m - slightly higher than the 2.0m clip forecast by economists. So far, Covid-19 has claimed 40.7m jobs in the US since the outbreak hit in March.
Tech stocks were down at the open, weighing on the Nasdaq, as word broke that Donald Trump planned to issue an executive order against social media giants, escalating his war on Twitter.
A draft copy of the order will see the White House limit legal protections afforded to social media companies, making it easier for federal regulators to hold companies liable for limiting users' freedom of speech.
Facebook chief executive Mark Zuckerberg said social media networks should not be held accountable for what politicians using its platforms post.
"I don't think that Facebook or internet platforms, in general, should be arbiters of truth," Zuckerberg said. "Political speech is one of the most sensitive parts in a democracy, and people should be able to see what politicians say."
Heightened tensions between the US and China were also in focus again as China's National People's Congress endorsed a national security law for Hong Kong that will alter the territory's mini-constitution, straining relations between Beijing, Washington and Downing Street.
Elsewhere on the macro front, orders in the US for goods made to last more than three years fell sharply in April, with weakness especially evident in demand for transport equipment.
According to the Department of Commerce, in seasonally adjusted terms, total durable goods orders dropped at a month-on-month clip of 17.2% to reach $169.7bn. Economists had penciled in a decline of 18.0%.
Still on data, the economy contracted at a faster than initially expected pace during the first three months of 2020 - with economists expecting an even more dire outcome for the April-June quarter.
The Commerce Department revealed that gross domestic product had fallen at an annual rate of 5% in the first quarter, a bigger decline than the 4.8% drop first estimated a month ago and the biggest quarterly decline since an 8.4% fall in the fourth quarter of 2008 in the depths of the global financial crisis.
Lastly, US pending home sales surprised on the downside on Thursday, marking a second monthly decline in a row amid the Covid-19 pandemic. Pending home sales dropped 21.8% in April, according to the National Association of Realtors, the biggest decline on record and far and above forecasts of a 15% drop.
New York Federal Reserve head John Williams will deliver a speech at 1600 BST.
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