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The Thursday Market Minute

  • Global stocks peel away from recent record highs as investors turn cautious ahead of three key U.S. job market readings over the coming days.
  • Private employers likely added 650,000 new jobs last month, analysts estimate, but labor market shortages could soon add upward pressure on wages. 
  • Philly Fed President  Patrick Harker says it may be time to trim the pace of bond purchases in the face of faster inflation, adding to hints that at least one leg of the Fed’s support stool is starting to wobble.
  • Benchmark 10-year note yields ease to 1.599% in overnight trading while the dollar index gains 0.15% to trade at 90.060.
  • AMC Entertainment shares extend gains in pre-market trading following yesterday’s surge that saw $39 billion worth of stock trade over the Wednesday session.
  • CDC data shows 136.1 million Americans have now been fully vaccinated against the coronavirus, with around 297 million doses administered as of Wednesday.
  • U.S. equity futures suggest a modestly weaker open head of the May ADP Employment report at 8:15 am Eastern time and weekly jobless claims at 8:30 am Eastern time.

U.S. equity futures slipped lower Thursday, while oil prices tested the highest levels in nearly two years, as investors continued to peel away from risk markets ahead of two key labor market readings over the coming days. 

Inflation concerns continue to dictate sentiment in global stocks, with consumer price gauges in the U.S. running at multi-decade highs and labor market shortages putting upward pressure on wages, and that has kept U.S. stocks rangebound for much of the past few weeks. 

Oil prices appear to confirm some of those pressures, with WTI testing the highest levels in two years — at $65.86 per barrel — following OPEC’s renewed optimism for a recovery in world demand and its tight control over supplies from members and non-member allies over the coming months. 

Comments from Philadelphia Fed Bank President Patrick Harker, who  told a virtual forum yesterday that it “may be time to at least think about tapering our $120 billion in monthly Treasury bond and mortgage-backed securities purchases” in the face of faster inflation and a robust recovery, added to concern that markets might be susceptible to near-term changes in Fed policy.

That puts the emphasis squarely on today’s ADP National Employment Report, which is expected to show private employers added 650,000 net jobs last month, and tomorrow’s official non-farm payroll reading from the Bureau of Labor Statistics. 

Thus far, bond markets haven’t reacted to any of the recent Fed hints on asset purchase tapering, and benchmark 10-year note yields remain locked in the low 1.6% range heading into today’s session, although the dollar index has been creeping higher against its global peers for the past three sessions, suggesting at least some bets are starting to form on a near-term move by Chairman Jerome Powell.

In the meantime, stocks look set for a modestly weaker open Thursday, with futures contracts tied to the Dow Jones Industrial Average indicating a 65 point opening bell decline and those linked to the S&P 500 price for a 9 point pullback.

Nasdaq Composite futures are set for a 35 point retreat, based on early futures moves, while 10-year note yields eased to 1.599% in early New York trading. 

After dominating trading for much of the Wednesday session, and closing 96% higher at an all-time peak of $62.55 each, AMC Entertainment  (AMC) – Get Report shares are back on the march Thursday, rising 20% in pre-market trading as the renaissance in so-called meme stocks continues to provide a welcome distraction for Wall Street.  

Short sellers have found it far less entertaining, however, with data from S3 partners indicating collective losses of $2.8 billion for those betting against the movie theatre chain yesterday, more than half of the year-to-date losses of $5.2 billion. 

Exxon Mobil  (XOM) – Get Report shares could also be active again Thursday after vote counts from last week’s annual meeting show that activist hedge fund Engine No. 1 has gained three seats on the oil major’s executive board as it pushes for changes to the group’s near-term energy strategy. 

In markets, European stocks  tracked U.S. equity futures lower despite soothing comments on pandemic support from European Central Bank President Christine Lagarde, with the Stoxx 600 slipping 0.16% in early trading, while Asia stocks were mixed following a suggestion from President Joe Biden that the U.S. could expand the list of companies it bars from investment over their links to the Chinese military.