U.S. Stocks May See Further Downside In Early Trading

After ending the previous session mostly lower, stocks are likely to see further downside in early trading on Thursday. The major index futures are currently pointing to a sharply lower open for the markets, with the Dow futures down by 347 points.

Overseas weakness may carry over onto Wall Street amid concerns about the outlook for global demand amid a renewed surge in Chinese Covid cases.

The recent jump in cases in China has offset recent optimism that the country would soon begin easing Covid restrictions.

Traders may also be expressing worries about the upcoming holiday shopping season after department store chain Kohl’s (KSS) withdrew its full-year guidance.

The withdrawal by Kohl’s comes after a disappointing forecast from Target (TGT) contributed to the weakness on Wall Street on Wednesday.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits edged slightly lower in the week ended November 12th.

The report said initial jobless claims dipped to 222,000, a decrease of 4,000 from the previous week’s revised level of 226,000.

Economists had expected jobless claims to come in unchanged compared to the 225,000 originally reported for the previous week.

A separate report from the Commerce Department showed a notable decrease in new residential construction in the month of October.

The report said housing starts tumbled by 4.2 percent to an annual rate of 1.425 million in October after falling by 1.3 percent to an upwardly revised rate of 1.488 million in September.

Economists had expected housing starts to slump by 2.0 percent to an annual rate of 1.410 million from the 1.439 million originally reported for the previous month.

The Commerce Department said building permits also dove by 2.4 percent to an annual rate of 1.526 million in October after jumping by 1.4 percent to a rate of 1.564 million in September.

Building permits, an indicator of future housing demand, were expected to plunge by 3.3 percent to an annual rate of 1.512 million.

The Philadelphia Federal Reserve also released a report showing regional manufacturing unexpectedly contracted at a faster rate in the month of November.

Stocks moved mostly lower over the course of the trading session on Wednesday, largely offsetting the upward move seen on Tuesday. The tech-heavy Nasdaq showed a particularly steep drop, while the Dow spent much of the session lingering near the unchanged line.

After ending Tuesday’s trading at a nearly two-month closing high, the Nasdaq tumbled 174.52 points or 1.5 percent to 11,183.66. The S&P 500 also slumped 32.94 points or 0.8 percent to 3,958.79.

Meanwhile, the narrower Dow edged down 39.09 points or 0.1 percent to 33,553.83, with strong gains by McDonald’s (MCD) and UnitedHealth (UNH) helping limit the downside for the blue chip index.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index fell by 0.4 percent, while Hong Kong’s Hang Seng Index dove by 1.2 percent.

The major European markets have also moved to the downside on the day. While the French CAC 40 Index has slumped by 1.2 percent, the U.K.’s FTSE 100 Index is down by 0.7 percent and the German DAX Index is down by 0.4 percent.

In commodities trading, crude oil futures are tumbling $1.58 to $84.01 a barrel after slumping $1.33 to $85.59 a barrel on Wednesday. Meanwhile, after edging down $1 to $1,775.80 an ounce in the previous session, gold futures are falling $14.70 to $1,761.10 an ounce.

On the currency front, the U.S. dollar is trading at 140.53 yen versus the 139.50 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0319 compared to yesterday’s $1.0395.