Market Snapshot: Dow seen falling ahead of jobless claims, second day of Powell testimony

What’s driving the market?

Hand-wringing about global economic growth has been revived early Thursday as benchmark bond yields are skidding lower, despite Fed boss Powell’s assurances that the central bank would act quickly if pricing pressures ran amok.

In the first of two days of testimony the central bank chief told lawmakers on Wednesday that pandemic-related supply-chain bottlenecks created “just the perfect storm of high demand and low supply,” which “should partially reverse as the effects of the bottlenecks unwind.”

Powell is slated to testify before the Senate Banking Committee later in the session at 9:30 a.m. Eastern Time.

Powell said Wednesday that, with expectations that pricing pressures will eventually fade, the central bank was in no hurry to pare purchases of Treasurys and mortgage-related assets, which are currently running at $120 billion monthly, and described the economy as “still a ways off” from meeting the Fed’s self-described goals of “substantial further progress.”

How long pricing pressures will persist is perhaps the big question dogging financial markets presently.

“These nagging concerns about inflation, transitory or otherwise have continued to dominate sentiment, while worries over the pace and persistence of rising prices, appear to be tempering optimism over the wider global recovery story,” wrote Michael Hewson, chief market analyst at CMC Markets UK, in a Thursday research note.

Meanwhile, the spread of the delta variant of coronavirus was also stoking anxieties on Wall Street. Dr. Francis Collins, director of the National Institutes of Health told CNN Wednesday that the “delta variant is spreading, people are dying, we can’t actually just wait for things to get more rational.”

“We’re losing time here,” the public health professional said as the U.S. vaccine program has slowed with 48.2% of the population fully inoculated, according to a tracker from the Centers for Disease Control and Prevention.

Before that, at 8:30 a.m. Eastern, the U.S. Labor Department will publish weekly jobless benefit claims report for the week ended July 7, which are expected to show 368,000 claims, versus 373,000 in the week-ago period.

Meanwhile, a report on manufacturing activity in the Philadelphia area, the Philly Fed index, for July is expected to show a reading of 28.5, according to a consensus of economists polled by Econoday. A separate survey on manufacturing activity in New York state, the Empire State Manufacturing index, for July is forecast to come in at 18.3.

Any reading above zero for either index indicates improving conditions.

Data on import and export prices for June also are due at 8:30 a.m., while a study on industrial production from the Fed is due at 9:15 a.m.

Meanwhile, Chicago Fed President Charles Evans will speak at 11 a.m.

Which companies are in focus?

• GameStop Corp. shares GME slid about in premarket trade Thursday, after Netflix Inc. NFLX announced its first major videogame hire, potentially signaling a move beyond its streaming-video roots.
• Shares of UnitedHealth Group Inc. UNH rose in premarket trading Thursday, after the healthcare provider reported second-quarter profit and revenue that were well above expectations and raised its full-year outlook, even as the company continued to expect COVID-19 to take a bite out of results. 
• Ross Stores Inc. ROST said late Wednesday that Chief Financial Officer Travis Marquette has resigned effective immediately to accept a position with another company which the retailer didn’t disclose.