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Wall Street to open lower as labor market recovery stalls

FILE PHOTO: Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, U.S. June 18, 2020. (REUTERS/Bryan Woolston)

By Shreyashi Sanyal and Devik Jain

Wall Street’s main indexes were poised to open lower on Thursday after data continued to show high levels of weekly jobless claims, adding to concerns about an economic rebound a day after the Federal Reserve issued an underwhelming stimulus plan.

The Labor Department’s report showed the number of Americans filing new claims for unemployment benefits fell last week, but remained perched at extremely high levels as the labor market recovery shifts into low gear and consumer spending cools.

In a news conference on Wednesday, Fed Chair Jerome Powell also indicated a long road to “maximum employment” and said the central bank was limited in its capacity to address some of the gaps around wage growth and workforce participation.

“The bulls basically wanted more long term bond buying (and) the fact that the Fed failed to provide that additional upside, investors are a bit more bearish today,” said Mike Bailey, director of research at FBB Capital Partners in Bethesda, Maryland.

The S&P 500 <.SPX> sold off after Powell’s remarks, with the technology sector <.SPLRCT>, which had been recovering from a rout earlier in September, tumbling 1.6%.

A broader slump in tech-related stocks halted a five-month rally in the benchmark index this month and pushed the Nasdaq into correction.

At 8:35 a.m. ET, Dow e-minis <1YMcv1> were down 320 points, or 1.14%. S&P 500 e-minis <EScv1> were down 52.25 points, or 1.55% and Nasdaq 100 e-minis <NQcv1> were down 263.5 points, or 2.34%.

The big U.S. banks including Goldman Sachs Group Inc <GS.N>, Bank of America Corp <BAC.N>, Citigroup Inc <C.N> and Wells Fargo & Co <WFC.N> fell 1% in premarket trading.

Carnival Corp <CCL.N> dropped 3.2% after its British cruiseline P&O Cruises extended a cancellation in sailings until early 2021. Other cruise operators such as Royal Caribbean Cruises <RCL.N> and Norwegian Cruise Line Holdings Ltd <NCLH.N> shed more than 2%.

German biotech firm BioNTech SE <BNTX.O> rose 2.1% as it said it was buying a production site from Swiss drugs giant Novartis <NOVN.S> to boost output of its potential coronavirus vaccine by several million doses.

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