U.S. stock futures pare loss to edge up as ECB points to ‘moderately’ slower pace of asset purchases

U.S. stock futures pared early declines Thursday morning, but were struggling to climb out of negative territory after data on employment showed that weekly claims for jobless benefit insurance fell sharply.

Separately, investors were parsing an updated policy statement from the European Central Bank that could help to inform the Federal Reserve’s plans to scale back on COVID-era policies.

What’s happening
  • Futures on the Dow Jones Industrial Average

    traded 41 points, or 0.1%, lower to 34,971.

  • Futures on the S&P 500

    slipped 6 points, or 0.1%, to 4,507.

  • Nasdaq-100 futures

    traded 5 points, or less than 0.1%, lower at 15,615.

On Wednesday, the Dow Jones Industrial Average declined 69 points, or 0.2%, to 35031.07, the S&P 500 dropped 6 points, or 0.1%, to 4514.07, and the Nasdaq Composite ended lower by 88 points, or 0.6%, to 15286.64.

What’s driving markets

Equity markets tilted lower on Thursday, following updates of weekly jobless claims and a policy statement from the ECB.

Initial jobless claims fell by 35,000 to 310,000 in the week ended Sept. 4, the Labor Department said Thursday, marking the lowest level of claims since the pandemic struck in March 2020 and the biggest decline in claims since late June.

Economists polled by The Wall Street Journal had estimated new claims would total 335,000.

Meanwhile, Europe’s central bank said that it would conduct asset purchases under its pandemic emergency purchase program, or PEPP, at a “moderately lower pace” after accelerating purchases in recent quarters. “Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favorable financing conditions can be maintained with a moderately lower pace of net asset purchases under the PEPP than in the previous two quarters,” the ECB said following a meeting of its Governing Council.

The ECB said PEPP purchases would continue with an envelope of €1.85 trillion through at least the end of March 2022. The ECB left key interest rates unchanged, as expected. ECB President Christine Lagarde was hosting a news conference at 2:30 p.m. Frankfurt time, or 8:30 a.m. Eastern.

Meanwhile, New York Fed President John Williams, who gets a vote at every interest-rate-setting meeting, said late Wednesday the central bank is still on track to reduce its bond purchases this year.

“Recently, stocks were in an upside trajectory on falling expectations that the Fed will taper this year, and this was due to the latest disappointing U.S. jobs data,” said Charalambos Pissouros, head of research at JFD Group.

Williams comments, however, suggest to some that there remains a chance that the Fed will announce a tapering plan sooner than later.

Which companies are in focus
  • GameStop

    was under pressure after-hours as the videogames retailer remained coy on its longer-term plans.

  • Lululemon Athletica

    by contrast rallied as the athleisure-apparel maker blew past Wall Street estimates for the quarter and increased its full-year forecast

How other assets are trading
  • The 10-year Treasury note

    was little changed at 1.34%.

  • The dollar was trading 0.2% lower, as measured by the ICE U.S. Dollar Index
    which stood at around 92.49.

  • Gold futures were on the rise, with the December contract

    up 0.3% at around $1,800 an ounce.

  • Oil futures

    rose, with West Texas Intermediate oil for November

    up 0.6% at $69.48 a barrel.

  • The Hang Seng

    tumbled 2.3% as China took aim at its videogame makers. The South China Morning Post reported the government will freeze new game approvals. Elsewhere in Asia, the Shanghai Composite SHCOMP closed 0.5% higher and Japan’s Nikkei 225 NIK closed advanced 0.6% lower.

  • European equities traded mostly lower, with the Stoxx Europe 600  SXXP down less than 0.1% and the FTSE 100  UKX off 1%.

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