US stocks marginally lower; retail stocks, weekly jobless claims in focus

US stocks edged marginally lower Thursday, handing back some of the previous session's record gains as investors digested more corporate earnings and labor market data.

At 09:40 ET (14:40 GMT), the Dow Jones Industrial Average slipped 60 points, or 0.1%, the S&P 500 index dropped 4 points, or 0.1%, while the NASDAQ Composite traded largely unchanged.

The main Wall Street indexes finished at record highs on Wednesday, boosted by a strong rally in major technology stocks. US equities have been on a tear since Trump’s election victory in early-November, with analysts expecting more gains as 2024 draws to a close. Powell flags strength in the economy; jobless claims rise 

Investors were also encouraged by Federal Reserve Chair Jerome Powell flagging strength in the US economy, which spurred flows into more economically sensitive sectors. 

Powell said the economy was in a better place than as it appeared in September when the Fed began cutting interest rates, allowing the Fed to be more cautious in considering further easing. Powell also flagged progress towards bringing down inflation, although his comments likely indicated support for a slower pace of rate cuts.

His comments are likely his last public statements before the Fed meets later in December, when the central bank is widely expected to cut interest rates by 25 basis points . 

Data released earlier Thursday showed that the number of Americans filing new applications for unemployment benefits increased moderately last week with initial claims  for state unemployment benefits rising 9,000 to a seasonally adjusted 224,000 for the week ended Nov. 30 - just above the forecast 215,000 claims.

Claims are at levels consistent with steady job growth, and have signaled a sharp rebound in nonfarm payrolls in November after the labor market was severely distorted by Hurricanes Helene and Milton as well as strikes by factory workers the prior month.

Nonfarm payrolls are expected to have increased by just over 200,000 jobs in November, on Friday, after rising by 12,000 in October, the lowest number since December 2020.

Goldman Sachs strategists continue to forecast consecutive 25 basis-point rate cuts in December, January, and March, followed by additional reductions in June and September.

However, they note that recent remarks from Federal Reserve officials have increased the likelihood that the Federal Open Market Committee might slow the pace of rate cuts sooner than previously expected, possibly as early as the December or January meetings. Retail earnings continue

There are more quarterly earnings to digest Wednesday, with the retail sector in particular focus.

Dollar General (NYSE:DG ), stock rose 1.9% after the discount chain operator reported third-quarter revenue that surpassed expectations, while also trimming the upper end of its annual profit forecast on hurricane-related expenses.

Kroger (NYSE:KR ) stock fell 0.5% after the retailer reported third-quarter revenue that missed analyst estimates, while American Eagle Outfitters (NYSE:AEO ) stock slumped 16% after it cut its target for annual comparable sales growth, in signs that apparel demand could be erratic during the critical holiday season.

Five Below (NASDAQ:FIVE ) stock rose 10% after the discount retailer reported better-than-expected third quarter results, raised its full-year outlook and announced the appointment of a new CEO.

American Airlines (NASDAQ:AAL ) stock soared 10% after the carrier raised its adjusted profit guidance for the current-quarter, banking on better pricing power on the backdrop of strong demand in travel. Crude rises on OPEC+ production delay report

Oil prices rose Thursday, taking support from a report OPEC+ has decided to delay the restart of its oil production increases by three months.

At 09:40 ET (14:40 GMT), Brent oil futures rose 0.5% to $72.69 a barrel, while West Texas Intermediate crude futures rose 0.6% to $68.95 a barrel. 

The Organization of Petroleum Exporting Countries and allies (OPEC+) has decided to delay the restart of its oil production increases by three months, Bloomberg reported Thursday, representing the third postponement as crude prices remain under pressure.

The additional production of 180,000 barrels per day was expected to start in January, but will instead start in April, the report said, and be implemented at a slower pace than previously outlined

(Ambar Warrick contributed to his article.)

Source: Investing.com