US stocks drop as investors mull impact of jobless data on inflation and Fed policy

NYSE Trader
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020. Bryan R Smith/Reuters
  • US stocks fell Thursday as investors mulled how a strong jobs report will impact the Fed’s policy and inflation.
  • Businesses added 978,000 jobs through May, exceeding the estimate of 650,000. Jobless claims fell below 400,000.
  • AMC shares fell after the movie-theater chain said it plans to sell about 11.6 million shares.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

All major US indices opened lower on Thursday as investors mulled how strong jobless data will impact Federal Reserve policy and prospects for inflation.

ADP’s monthly payrolls report showed businesses adding 978,000 jobs through May, handily exceeding the median estimate for 650,000 payrolls. Separately, weekly jobless claims fell below 400,000 for the first time since the pandemic slammed the US in March 2020.

Taken together, the ADP and claims data suggest Friday’s jobs report could show a sharp rebound in hiring following the disappointing April read. May’s US non-farms payroll data will be released on Friday.

Here’s where US indexes stood at the 9:30 a.m. ET open on Thursday:

Although monetary policy remains accommodative for now, tapering poses a risk to the stock market rally as it could erode confidence in the Fed’s transitory inflation outlook and drive interest rates higher, Piper Sandler’s Craig Johnson said.

The chief market technician expects consolidation in the near-term, but reiterated his 2021 price target of 4,625 for the S&P 500, saying “the path of least resistance remains higher longer-tem.”

Philadelphia Fed President Patrick Harker is the latest central bank official to flirt with the idea of discussing tapering asset purchases. On Wednesday Harker said the Fed should begin discussing the time frame for paring back its bond-buying program.

AMC fell after the movie-theater-chain-turned-meme-stock said it plans to sell up to 11.6 million shares. Other social-media favorite stocks like GameStop and Bed Bath and Beyond slipped in early morning tradingafter staging sky-high rallies at the start of the week.

Oil dipped Thursday after closing at post-pandemic highs on Wednesday. West Texas Intermediate crude fell as much as 0.06%, to $68.54 per barrel. Brent crude, oil’s international benchmark, rose 0.89% to $71.99 per barrel, at intraday highs.

US 10 year Treasury yield was last at 1.599%, while the dollar index rose 0.2%, set for its largest daily rise in a week.

As the US dollar regained strength, gold’s rally slowed.

Gold futures were last down 1.46% at $1,880.50 an ounce. The price of gold has risen by around 13% in the last three months and this week touched its highest level since the start of the year.