S&P 500 and Dow Jones: Futures Surge as Jobless Claims Drop

Market Sentiment Improves as Jobless Claims Drop

S&P 500 futures climbed higher on Thursday, signaling a potential market rebound after recent volatility. The uptick comes as new labor market data bolstered investor confidence in the U.S. economy.

Futures and Labor Market

Futures tied to the S&P 500 gained 1.1%, while Dow Jones Industrial Average futures added 211 points (0.5%), and Nasdaq-100 futures advanced 1.5%. The positive movement was largely attributed to the latest weekly jobless claims report. First-time filings for unemployment benefits came in at 233,000 for the week ended August 3, down 17,000 from the previous week. This figure was lower than the Dow Jones estimate of 240,000, alleviating concerns about the labor market’s strength.

Corporate Earnings Impact

Eli Lilly saw a significant surge of around 12% after reporting better-than-expected earnings. The pharmaceutical giant raised its full-year outlook, citing strong demand for its diabetes treatment Mounjaro and obesity drug Zepbound. In contrast, Warner Bros. Discovery and Bumble faced headwinds in extended trading following soft second-quarter revenue results.

Recent Market Performance

The positive futures movement follows a challenging period for stocks. On Wednesday, major indices failed to maintain an early rally, with the S&P 500 falling 0.8%, the Nasdaq Composite sinking 1.1%, and the Dow shedding 0.6%. All three averages have declined in four of the past five sessions.

Oil Market Developments

U.S. crude oil futures rose for the third consecutive day, trading above $75 per barrel. West Texas Intermediate has rebounded after six weeks of declining crude inventories, overshadowing recent recession fears. The oil market remains cautious as geopolitical tensions simmer, particularly regarding Iran’s threat to strike Israel. Despite ongoing conflicts in the Middle East, analysts note that there has been no significant disruption to the flow of crude oil in the region.

Market Forecast

While the immediate market outlook appears bullish, traders should remain vigilant. The recent volatility could be a preview of what’s to come, with economic concerns, geopolitical conflicts, and the upcoming U.S. elections potentially keeping investors on edge. Traders are advised to position their portfolios for potentially elevated levels of volatility in the coming months as the market continues to assess the state of the U.S. economy and corporate financial conditions.

Technical Analysis

E-mini S&P 500 Index futures turned around on Thursday after a surprisingly better initial claims report. The benchmark is currently straddling the week’s mid-point at 5202.63. Trader reaction to this level should set the tone today.

A sustained move over 5202.63 will indicate the presence of buyers. If this creates enough upside momentum we could see a near-term surge into the major pivot at 5360.50. This price level is the gateway to the 50-day moving average at 5500.53.

The inablity to hold 5202.63 will be a sign of weakness. This could fuel a break into the 200-day moving average at 5150.19, followed by this week’s low at 5120.00. Both levels are critical to the long-term trend.