#Market Snapshot: Dow gains 250 points as jobless claims hit lowest since November

What’s driving the market?

Market participants appear heartened by jobless benefit claims falling for a third straight week to the lowest number of claims since November, but the reading remains elevated.

U.S. initial jobless claims fell by 33,000 to 779,000 at end of January, compared with economists’ consensus estimates for 835,000 from 847,000 the week before, according to economists surveyed by Econoday.

Although new coronavirus cases have been retreating in a number of U.S. states, market participants still worry that the pandemic may hinder a more rapid improvement of the jobs market. The report comes ahead of the closely followed employment situation reading due on Friday from the Labor Department.

“Cutting through the noise, we believe the labor market is essentially treading water,” wrote Scott Ruesterholz, portfolio manager at Insight Investment.

“Over 60% of the jobs lost since February 2020 are in virus-sensitive sectors like hotels and education, which will not substantially boost employment until there is mass vaccination and larger-scale reopening, which will likely be in late Q2 and Q3,” Ruesterholz wrote in emailed comments.

“Until this happens, we do not see scope for significant near-term improvement, though we expect swifter improvement in the second half of the year, bringing unemployment down toward 5%,” he said.  

Thursday also marks a busy day of earnings and economic reports with investors looking for signs that the economy is rebounding from the COVID-19 pandemic, despite an elevated number cases and the emergence of new variants of the coronavirus amid the rollout of effective vaccines.

In earnings, no fewer than 42 companies are slated to report quarterly results on Thursday, representing the busiest day on the calendar for fourth-quarter results.

Headliners include Ford Motor
F,
+2.50%
 and Snapchat parent Snap Inc.
SNAP,
-0.36%,
but include results from the likes of Clorox Co.
CLX,
-4.38%,
Yum Brands
YUM,
+0.02%,
and Merck & Co.
MRK,
-1.20%,
which also announced that Kenneth Frazier, its CEO would be stepping down after 10 years at the helm of the drug company.

See: S&P 500 earnings recession set to end, as Q4 EPS swings to growth

In public health news, the U.S. added at least 118,991 new cases on Wednesday, according to a New York Times tracker, and counted at least 3,843 deaths. Case numbers have been declining, however. The U.S. averaged 136,438 new cases a day in the past week, down 30% from the average two weeks ago. Hospitalizations have also been falling, according to the COVID Tracking Project. There were 91,440 COVID-19 patients in U.S. hospitals on Wednesday, down from 92,880 a day earlier and the lowest level since Nov. 27. 

Against that backdrop, investors are also awaiting next steps on a new fiscal relief package. President Joe Biden said he was open to sending $1,400 payments to a smaller group of Americans in the next round of coronavirus aid and changing the overall price tag of his $1.9 trillion plan, The Wall Street Journal reported.

Also on investors’ radar was a meeting of financial regulators, including Treasury Secretary Janet Yellen, to discuss the market volatility related to GameStop Corp.
GME,
-23.36%
and AMC Entertainment Holdings
AMC,
-12.82%
and other so-called meme stocks.

See also: The SEC could cripple Robinhood’s business model by enforcing existing rules, experts say

In other economic reports, U.S. productivity dropped to a 4.8% annual rate in the fourth quarter. Separately, U.S. factory orders for manufactured goods rose 1.1% in December after a 1.3% gain in the prior month, the Commerce Department said Thursday. Economists surveyed by The Wall Street Journal were expecting a 0.7% gain.

Which stocks are in focus?

• Shares of Merck slipped in premarket trading Thursday, after the drugmaker reported a fourth-quarter profit that missed expectations, but revenue that beat and provided and upbeat full-year outlook. Shares of Merck were down 1.7%.

• Clorox fell 4.6% Thursday after the maker of cleaning products and household goods posted stronger-than-expected earnings for its fiscal second quarter.

• Costco Wholesale Corp. COST were in focus after the retailer on Wednesday reported net sales of $13.64 billion for the retail month of January, up 18% from $11.57 billion in the same month a year ago. Shares rose 0.3%.

• Shares of Hershey Co. 
  HSY,
  -0.14%
  were retreated 0.6% after the chocolate and confectionary products company reported fourth-quarter profit and sales that rose above expectations, helped by market share gains and volume growth.

• Yum Brands stock was trading flat Thursday after the fast-food company reported fourth-quarter earnings that beat expectations.

• Tapestry Inc.‘s stock
  TPR,
  +2.80%
  rose over 3% after the luxury fashion and accessories company reported fiscal second-quarter earnings and sales that beat expectation.

• Bristol-Myers Squibb Co.
  BMY,
  +0.76%
   said Thursday it had a net loss of $10.027 billion, or $4.45 a share, in the fourth quarter, wider than the loss of $1.056 billion, or 55 cents a share, posted in the year-earlier period, weighed down by charges relating to the MyoKardia asset acquisition, the purchase of Celgene, contingent value rights air value adjustments, equity investment gains, intangible assets impairment charges and other acquisition and integration expenses. Shares slipped 0.3%.

• Shares of New York Times Co. NYT were up slightly after the media and newspaper company reported fourth-quarter adjusted profit and revenue beats, as strength in subscription revenue offset weakness in advertising.

• Quest Diagnostics Inc. DGX said Thursday its board has approved a 10.7% increase in its quarterly dividend to 62 cents a share. Shares were down 1.2%

• GameStop shares
  GME,
  -23.36%
  were off 19.5% and have declined over 77% so far this week, and AMC Entertainment shares were trading 11% lower and off 40% so far this week, as the popular retail stocks see trade stabilize after a massive short squeeze.

How are other assets faring?

• The yield on the 10-year Treasury note TMUBMUSD10Y rose about 1.5 basis points to 1.14%. Yields and bond prices move in opposite directions.

• The ICE U.S. Dollar Index, DXY, a measure of the currency against a basket of six major rivals, was up 0.2% at 91.383.

• Gold futures
  GCJ21,
  -2.65%
  slumped nearly 2% to below $1,800 an ounce

• Oil futures rose, with the U.S. benchmark CL.1 trading up 0.6% on the New York Mercantile Exchange.

• The Stoxx 600 Europe index SXXP traded 0.3% higher, while London’s FTSE 100 UKX fell 0.1%.

• In Asia, the Shanghai Composite SHCOMP fell 0.4% lower, Hong Kong’s Hang Seng Index HSI fell 0.7% and Japan’s Nikkei 225 NIK fell 1.1%.