Stocks are flat as jobless claims rise unexpectedly

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US stocks stagnated as an unexpected surge in jobless claims kept investors nervous about the economy.

The Dow Jones Industrial Average fell 33 points. The S&P 500 traded almost flat. The tech-heavy Nasdaq Composite that was added leads the markets, up 0.4%.

Unemployment claims rose unexpectedly to 419,000 last week, more than the 350,000 Dow Jones surveyed economists and more than the previous period’s revised upwards of 368,000, the Labor Department reported Thursday. The 10-year government bond yield ticked lower after the report.

“There is no question that the rise in unemployment claims is an unwelcome surprise and a dent in further job improvement,” Mike Loewengart, managing director of investment strategy at E-Trade, told CNBC. “The disappointing number could be an initial shock to the system, but many might view this as short-term volatility in the labor market until benefits run out. For the most part, the market has shaken off Monday’s sell-off in favor of strong gains, allowing market watchers to see the forest from the trees in this scenario. “

The Dow is up slightly over the course of the week and is about 1% off a record high. The 10-year Treasury yield was slightly lower to 1.262% on Thursday but rose from a decline to 1.17% earlier in the week that startled stocks.

Investors are getting back into their favorite tech stocks as economic worries re-emerged and yields plummeted. Apple, Amazon and Microsoft, all of which will be reporting their profits next week, are trading higher.

American Airlines posted a profit in the second quarter and posted five consecutive quarters of losses thanks to the recovery in travel demand and state aid. That said, stocks, which were up 8% this week, fell slightly less than 1% on Thursday. Similarly, Southwest Airlines reported quarterly earnings, but the airline’s stock is 1.7% lower.

Union Pacific, meanwhile, rose more than 2% after announcing net earnings of $ 1.8 billion, or $ 2.72 per diluted share, for the second quarter. That’s an increase of $ 1.1 billion, or $ 1.67 per diluted share, for the year-ago quarter.

A strong reporting season for the second quarter continues, with AT&T shares rising slightly after earnings and revenue surpassed analyst estimates. CSX rose over 4% after railroad profits more than doubled in the second quarter.

Texas Instruments is down about 5% after the chipmaker beat expectations for the second quarter but warned third-quarter results could fall short of analysts’ estimates.

On Wednesday, the Dow gained 286 points, or 0.83%, while the S&P rose 0.82%. The Nasdaq Composite was the relative outperformer with a gain of 0.92%. Energy was the top performing S&P group, gaining 3.5% as oil prices rebounded.

Wednesday’s gains built on Tuesday’s strong session, and large averages have now offset losses from Monday’s sell-off. The Dow lost more than 700 points earlier in the week as rising Covid cases worldwide depressed sentiment.

“The truth is that investors have been very spoiled by recent stock market performance,” said Ryan Detrick, LPL Financial’s chief market strategist. “Incredibly, we haven’t seen more than a 5% decline since October. While we firmly believe this bull market is alive and well, we shouldn’t delude ourselves that trees will grow forever. The risk undoubtedly increases when we in the difficult months of August and September. “

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A busy week of earnings continues on Thursday. Intel, Twitter, Snap and Capital One will post quarterly updates after the market closes.

So far, according to Refinitiv, 15% of the S&P 500 have reported gains, with 88% beating earnings estimates. 84% of the companies reported exceeded their sales expectations.

“We expect the sloppy trade to continue in the seasonally weak summer months; however, our baseline scenario remains that the primary trend remains higher for the next 12 months, ”wrote Keith Lerner, Chief Market Strategist at Truist, in a customer announcement. “The S&P 500, which hit a new record high last week, has had one of the longest periods in the past decade without a 5% decline,” he added.

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