Markets retreated from a rally that spanned three trading sessions, opening lower Thursday morning, despite fresh data from the U.S. Labor Department that showed the number of Americans filing initial jobless claims fell to the lowest level in five decades.
All major U.S. indexes were down in early trading, led by a 165.80 point drop in the Dow to 35,597. The S&P 500 pulled back 11.09 points after climbing earlier this week to a near record high, and the tech-focused Nasdaq opened 11.23 points lower to 16,324.75.
Weekly jobless claims fell to their lowest level since September 1969, below the pre-pandemic average of about 220,000 per week, further signaling a tight labor market as employers seek to retain workers.
The U.S. Food and Drug Administration of Pfizer Inc and BioNTech’s COVID-19 vaccine booster shot for those aged 16 and 17 as the CDC strengthens its recommendations for those who are eligible to get a third dose. Shares of Pfizer (PFE) were up on 1.08% on Thursday, trading at $52.44 per share.
Investors continue to assess the risks of Omicron infections, with mixed news about the severity of illness and its response to vaccines.
“The Omicron variant has obviously been a key variable that contributed to the sell-off that we saw, and a lot of uncertainty remains around that, but our colleagues are so far thinking that while much is yet to be known, so far signs point to it not affecting the course of the pandemic dramatically, but obviously there is still a lot we need to hear there,” Bank of America senior U.S. equity strategist Jill Carey Hall told Yahoo Finance Live.
“If COVID gradually improves rather than a major resurgence in 2022, we expect to see a continued recovery in the U.S. economy—continued recovery in services spending,”
Bloomberg reported that the COVID-19 strain was found to be 4.2 times more transmissible in its early stage than the Delta variant.
The news follows consecutive gains in the last three trading sessions after investor concerns around the Omicron variant were eased by reports of less severe infection and early lab results from Pfizer Inc. and BioNTech showed a third dose of their coronavirus vaccine “neutralizes” the variant.
“We do think that there is fundamental support there for markets to continue to move higher here,” Emily Roland, co-chief investment strategist at John Hancock investment management, told Yahoo Finance Live on Tuesday. “Obviously we had a couple of things spook us over the last week or so, the emergence of the Omicron variant as well as this pivot from the Fed, potentially seeing them accelerating their tapering of asset purchases here. But the bottom line is that the economy is strong.”
With virus concerns diminishing, investors are pivoting their attention back to economic data, awaiting Consumer Price Index (CPI) figures on Friday to assess the extent inflationary pressures will persist.
“If the Omicron variant was to lead to a resurgence in goods spending at the expense of services or to further complicate supply disruptions, there could be a clear inflationary impact, too,” wrote HSBC economist James Pomeroy earlier this week in a research note to clients. “The inflation news in the past few weeks has been decidedly mixed — with upside surprises in both the U.S. and eurozone being offset by the possibility of some of the supply chain issues starting to alleviate, while energy prices have fallen sharply in recent days.
11:00 a.m. ET: Wholesale inventories rise above estimates ahead of holidays
US wholesale inventories climbed above estimates in October as companies stock up for holiday season demand.
Latest figures from the Commerce Department released Thursday showed wholesale inventories rose 2.3%, slightly more than the 2.2% estimated last month and 14.4% up from a year earlier.
The rise in inventories at wholesalers suggests restocking of warehouses could support economic growth this quarter. U.S. businesses recently struggled to hold inventories on hand due to supply chain delays and strong sales.
10:45 a.m. ET: Gamestop (GME) trades lower following disappointing earnings
Shares of Gamestop (GME) dropped in early trading after the video game retailer posted Q3 earnings Wednesday reflecting widening quarterly losses that disappointed investors. The stock was down by as much as 6% after markets opened on Thursday.
Wedbush analyst Michael Pachter cut his price target from $45 to $50, attributing the downgrade to lack of clarity from management on a digital transformation plan for the company promised in the past that “has yet to crystalize.”
“Another quarter, still no turnaround strategy in sight,” Pachter wrote in a note to clients.
The video game company and meme-stock darling reported a quarterly loss of $1.39 per share, higher than consensus estimates.
9:36 a.m. ET: Stocks open lower
Here were the main moves in markets as of 9:36 a.m. ET:
S&P 500 (^GSPC): -10.44 (-0.22%) to 4,690.77
Dow (^DJI): -134.51 (-0.38%) to 35,620.24
Nasdaq (^IXIC): -19.58 (-0.12%) to 15,767.41
Crude (CL=F): -$0.54 (-0.75%) to $71.82 a barrel
Gold (GC=F): -$2.80 (-0.16%) to $1,782.70 per ounce
10-year Treasury (^TNX): -1.7 bps to yield 1.4920%
8:30 a.m. ET: Jobless claims hit new record low
New weekly jobless claims came in well below expectations and reached its lowest level since September 1969. The Labor Department reported that 184,000 claims were filed for the week ending Dec. 4. Claims are hovering below their pre-pandemic levels.
Continuing claims, which represent the number of individuals still receiving unemployment benefits via regular state programs, have also come down and held below 2 million last week. For the week ended Nov. 27, continuing claims was 1.992 million.
8:30 a.m. ET Thursday: Stock futures slip
Here were the main moves in markets in early trading Thursday:
S&P 500 futures (ES=F): -19.25 points (-0.41%), to 4,679.75
Dow futures (YM=F): -157 points (-0.44%), to 35,589
Nasdaq futures (NQ=F): -67.50 points (-0.41%) to 16,324.75
6:57 p.m. ET Wednesday: Stock futures open flat
Here were the main moves in markets in late trading on Wednesday:
S&P 500 futures (ES=F): -1.75 points (-0.04%), to 4,697.25
Dow futures (YM=F): + -8 points (-0.02%), to 35,728
Nasdaq futures (NQ=F): -16.50 points (-0.10%) to 16,375.75
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc