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US close: Stocks slide following jobless data

By Iain Gilbert

Date: Thursday 23 Jul 2020

US close: Stocks slide following jobless data

(Sharecast News) - Wall Street stocks closed lower on Thursday following the release of this week's jobless claims data and some key corporate earnings.
At the close, the Dow Jones Industrial Average was down 1.31% at 26,652.33, while the S&P 500 was 1.23% lower at 3,235.66 and the Nasdaq Composite saw out the session 2.29% weaker at 10,461.42.

The Dow closed 353.51 points lower on Thursday, reversing gains recorded in the previous session despite US-Sino tensions coming back into focus as news of a coronavirus vaccine deal between the White House and pharma groups Pfizer and BioNTech lifted sentiment.

Thursday's main focus was the Labor Department's jobless claims data, which saw initial jobless claims in the US rise modestly and somewhat unexpectedly during the previous week, marking the first increase since March.

Initial claims for the week ending on 18 July rose by 109,000 to reach 1.416m, a far cry from the dip to 1.28m economists had forecast as the reimposition of lockdown measures led to renewed increases.

However, the four-week moving average of initial claims, which aims to smooth out the variations in the data from one week to the next, retreated by 16,500 to 1,360,250. Secondary unemployment claims also retreated by 1.10m to 16.19m over the week ending 11 July.

Focus was also on some key corporate earnings from Tesla and Microsoft overnight as Tesla smashed analyst expectations with a fourth consecutive profitable quarter, while Microsoft shares were lower despite posting largely positive results.

American Airlines posted a second consecutive quarterly loss as Covid-19 continued to hammer demand, Southwest Airlines also cited similar reasons for its $915m quarterly loss.

Word that Republican lawmakers were mulling over the concept of extending a watered-down version of current unemployment benefits through to the end of 2020 initially led to some optimism on the Street.

On Thursday, Treasury Secretary Steven Mnuchin said an extension in unemployment benefits would be based on "approximately 70% wage replacement".

Also on the macro front, the Kansas City Fed manufacturing activity index for July came in at 3.0 versus estimates for a reading of 5.0. However, the index was up from last month's reading of 1.0.

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