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          U.S. Stock Futures Rally as Jobless Claims Trend Lower

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          05/07/2020 | 09:06am EDT

          By Caitlin Ostroff and Xie Yu

          U.S. stock futures held earlier gains Thursday as the number of new applicants for unemployment fell from the week prior.

          Futures linked to the S&P 500 rose 1.5%, suggesting that U.S. stocks may recover ground after the opening bell.

          Bond investors' risk appetite seemed to be more muted, with the yield on the 10-year U.S. Treasury edging down to 0.693%, from 0.709% Wednesday. The yield had jumped Wednesday after the Treasury Department announced it would increase the supply of longer-dated debt to pay for stimulus measures in response to the coronavirus pandemic and its economic fallout.

          Jobless claims for the week ended May 2 rose by 3.169 million, with total applications since mid-March surpassing 33 million. Some fund managers have chosen to take heart as the number of new claims each week has steadily fallen since surpassing 6 million in the last week of March.

          President Trump's pledge on Wednesday to shift resources to reopening the economy and developing a vaccine have also buoyed optimism. Health authorities are cautioning against moving too quickly, in case the number of infections and fatalities climbs again, but some business owners have pressed for easing of restrictions to bolster the economy.

          "What you're really trading and thinking about is the recovery: Is it going to be a swift recovery or is the recovery going to be much longer than that?" said Justin Onuekwusi, head of retail multiasset funds at Legal & General Investment Management. "It's clear the market seems to be pricing in scenario one."

          At the same time, fresh signs of a deterioration in relations between the U.S. and China are weighing on sentiment, with the two governments exchanging barbs as the coronavirus pandemic deepens the rancor. Mr. Trump has said he is considering using tariffs and other ways to collect compensation from Beijing.

          "The mood of the market so far has been grasping for positives," said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. "If the trade war restarts again or if we see a rebound of cases, that could see the market move toward a much more pessimistic worldview."

          Ahead of the opening bell, shares in Lyft rose 15.6% after the ride-hailing company's first-quarter earnings Wednesday suggested that it was resilient to the worst of the pandemic. Uber Technologies, which will post results after markets close, climbed 7.7%.

          Shares in PayPal Holdings gained 10.2% offhours after the digital payments company reported a sharp increase in new active accounts Wednesday.

          Shares in ViacomCBS rallied 19% in premarket trading after the media company reported growth in its streaming business as consumers stayed home. Shares in Raytheon Technologies rose 5.3% after it reported a higher-than-expected adjusted profit for the first quarter of 2020.

          In Europe, the pan-continental Stoxx Europe 600 rose 0.9%, led higher by U.K. and French stocks.

          Shares in John Malone's Liberty Global rose 5.3% premarket after the company said it would combine its U.K. telecommunications unit with Spain's Telefonica, creating a new British telecom giant worth nearly $39 billion.

          The Turkish lira fell to a record low against the dollar Thursday as investors speculated that its central bank would have limited ability to stymie its decline going forward.

          Asian markets were mixed by the close, with benchmark indexes in China and Hong Kong edging lower while the Japanese gauge ticked higher.

          Data Thursday showed China's exports rebounded in April, beating market expectations by growing 3.5% from the previous year in dollar terms. But exports are likely to fall back sharply in May as business activity slowed for China's global trade partners, said Julian Evans-Pritchard, an economist at Capital Economics.

          "The threat of additional U.S. tariffs on Chinese goods shouldn't be ignored given the likelihood that the 'phase one' trade deal soon falls apart," Mr. Evans-Pritchard said.

          The S&P 500 and Dow Jones Industrial Average edged lower Wednesday, while the Nasdaq Composite rose, as investors tried to untangle data and earnings to determine what the economy might look like in the months ahead.

          Investors are grappling with a range of questions, from the pace of economic reopening to the long-term effects of central bank support, according to Martin Hennecke, Asia investment director with St. James's Place Wealth Management.

          "No one can predict exactly how Covid-19 will play out from here, and there are always other risks present as well," Mr. Hennecke said, pointing to high government debt-levels as one potential trigger for volatility. Concerns were resurfacing about trade tensions between the U.S. and China, and whether that could prompt currency devaluations to support exports, he said.

          June futures for Brent crude oil gained 6.5% at $31.64 a barrel and West Texas Intermediate June futures climbed 9.1% to $26.17 a barrel on reports that Saudi Arabia had raised the price at which it will sell oil to Asia in June.

          "The market didn't really know exactly how difficult and competitive it would be to get oil out the door in June and the Saudis are indicating they're not going to struggle to put oil into the market in such volumes, " said Bjarne Schieldrop, chief commodity analyst at SEB Markets.

          David Hodari contributed to this article.

          Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Xie Yu at Yu.Xie@wsj.com


          Stocks mentioned in the article
          ChangeLast1st jan.
          AMP LIMITED -1.72% 1.71 End-of-day quote.-10.70%
          BYD COMPANY LIMITED -8.87% 72.45 End-of-day quote.86.49%
          DEERE & COMPANY -0.78% 175.35 Delayed Quote.1.21%
          DJ INDUSTRIAL -0.68% 26469.89 Delayed Quote.-7.25%
          EURO / US DOLLAR (EUR/USD) 0.01% 1.1656 Delayed Quote.3.41%
          LETS HOLDINGS GROUP CO., LTD. -10.04% 10.22 End-of-day quote.69.21%
          LONDON BRENT OIL 0.05% 43.3 Delayed Quote.-34.38%
          LOOK HOLDINGS INCORPORATED -2.20% 712 End-of-day quote.-43.13%
          NASDAQ 100 -0.92% 10483.132338 Delayed Quote.20.04%
          NASDAQ COMP. -0.94% 10363.177069 Delayed Quote.15.50%
          S&P 500 -0.62% 3215.63 Delayed Quote.-0.47%
          SHIFT, INC. 0.17% 11700 End-of-day quote.46.62%
          THE GLOBAL LTD. -2.27% 215 End-of-day quote.-54.35%
          THE NEW HOME COMPANY INC. -2.52% 4.25 Delayed Quote.-8.80%
          UBER TECHNOLOGIES, INC. -3.08% 31.18 Delayed Quote.4.84%
          VIACOMCBS INC. -1.51% 24.75 Delayed Quote.-41.03%
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