A good jobless claims report could boost stocks
After falling for three straight days, stocks need a reason to move up. A decent jobless claims report could help. So could a benign day for interest rates.
Stocks have now fallen for three straight days in the United States, the first time that's happened for the Dow Jones industrials ($INDU) in 2013 and the first time since late December.
The market could use a break on Thursday, but it's not clear it will get one.
Much of the loss this week has occurred because of worries over when the Federal Reserve will officially let interest rates move higher.
At the same time, the dollar moved lower against major currencies, especially the Japanese yen. Normally, a falling yen helps U.S. stocks. But the issue is that speculators who borrowed cheap money in Japan to finance positions in Japan and elsewhere are scrambling to get their money out with minimal losses. So, the yen is rising and depressing stocks.
To complicate matters, Japanese stocks fell more than 6% on Thursday. Since peaking at 15,942.60 on an intraday basis on May 23, the index is down nearly 22%. If you believe a bear starts when a loss hits 20%, Japan is in a bear market.
The losses have pushed European stocks lower in Thursday trading and suggest the Dow could open as many as 75 points lower.
On Wednesday, the Dow fell 127 points to 14,995. The Standard & Poor's 500 Index ($INX) was off 14 points to 1,612, and the Nasdaq Composite Index ($COMPX) dropped 37 points to 3,400. The Dow is off 3.5% from its intraday peak of 15,542 on May 22. The S&P 500 has dropped 4.4%, with the Nasdaq down 3.7%.
There are other issues facing stocks, and a few will be front and center on Thursday, including the woes of the Japanese stock market. Here are three others that may affect markets.
Jobless claims: a real number
Thursday brings an honest-to-gosh data point that matters. The weekly report on jobless claims, due at 8:30 a.m ET. New jobless claims have run at 352,000 to 355,000 a week for all of 2013 -- doesn't matter if we're talking unadjusted, seasonally-adjusted or the four-week moving average.
The number is down about 3.3% from 2012, 13% from 2011 and 38% from 2009 when the economy really was in the tank. And it's important because it offers a hint of what's to come. And that basically is fairly steady.
The seasonally adjusted claims number is normally the one that's reported. If it shows a big gain from a the number a week ago, 346,000, you might see more selling. If the number is below 346,000, look for a market pop. Don't expect a number below, say, 330,000. Since 1970, the weekly jobless claims number has averaged about 377,000.
Can the S&P 500 hold 1,600?
After a big sell-off on June 5, stocks rebounded when the S&P 500 held at slightly under 1,600. With Wednesday's sell-off, 1,600 is within range of bearish sellers.
So the question is whether investors will step in to support the S&P 500 at 1,600. If they don't, the index could drop to 1,550 or 1,500.
Where will the 10-year Treasury trade?
The 10-year note traded as low as 1.61% on May 1 and finished Wednesday at 2.23%, which was also its high on the day.
The 10-year yield has hit 2.29% but not held. A move above 2.29 that holds will set off some selling.
How will Coty trade?
Coty Inc. (COTY) sold 57.1 million common shares at $17.50 each, raising about $1 billion. The amount could rise to $1.15 million with extra allotments.
The biggest question is how will the shares trade on Thursday. If there's a sizable gain to, say, $25, a 42% gain, investors should be cheered.
The sale reduces the stake of Jos. A Benckhiser, the holding company for Germany's Reiman family, as well as company insiders. The company recently bought two U.S. coffee companies: Caribou Coffee and Peet's.
All that oil
U.S. crude-oil production grew by more than one million barrels a day in 2012. That was the most in U.S. history and the biggest gain for any country in 2012.
The gains are a reflection of how fracking has made boosted global supplies. U.S. crude production in the U.S. jumped 14% last year to 8.9 million barrels a day, according to the newly released Statistical Review of World Energy, an annual compilation of industry trends published by oil giant BP (BP).
The new supplies of crude, coming from fields ranging from North Dakota to south Texas, helped keep the global market adequately supplied and helped markets weather declining oil production elsewhere in the world, especially Iran.
It may also put pressure on oil prices globally, which have tended to key on Brent, the benchmark North Sea crude. Brent supplies are starting to play out.
That may not help oil stocks, but investors could conclude lower prices at the gas pump would boost consumer confidence.
And I would be remiss if I didn't note that only four Dow stocks were higher, along with just 68 S&P 500 stocks and 10 stocks in the Nasdaq-100 Index ($NDX). Apple (AAPL) and Google (GOOG) were among the losers.
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