U.S. initial jobless claims took a small step backward, rising for the period ended last week. But the setback seems lost amid a widespread retreat from stocks on Thursday.
The Labor Department reported that claims rose by 9,000, to 408,000 -- above the 400,000-level that economists had been expecting. This does mark a setback after claims in the previous week fell to their lowest level since early April, providing a bit of hope for investors looking for improvements in the U.S. employment situation. At least the four-week moving average fell by 3,500, to 402,500.
Meanwhile, the consumer price index in July rose by 0.5 per cent over June, marking its biggest jump since March. Economists had been expecting a smaller, 0.3 per cent increase. However, after stripping out volatile food and energy items, this reading of prices rose by 0.2 per cent in July, in line with economists' expectations.
So far, the economic reports seems to be disappearing into another market rout, with major indexes down sharply with less than an hour before North American stock markets open. Futures for the Dow Jones industrial average were recently spotted down 203 points or 1.8 per cent -- marking the sharpest drop since last Wednesday. Futures for the broader S&P 500 were down 27 points or 2.3 per cent.
Banks were taking the brunt of the downturn, after Morgan Stanley cut its forecast sharply for euro zone growth in 2011 and 2012. As well, the Wall Street Journal reported that the U.S. arms of major European banks were being scrutinized by U.S. regulators, raising concerns that the European debt crisis might be spilling into the United States.