Futures Hold Losses After Jobless Claims
U.S. stock index futures were sharply lower Thursday after Federal Reserve Chairman Ben Bernanke hinted the central bank may scale back its asset purchases later this year and following a weaker-than-expected jobless claims report.
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Fed policymakers said in a statement Wednesday that the central bank would keep buying $85 billion in bonds a month. But in a press conference, Bernanke said if the economy continues to improve, the central bank could could start winding down its asset-purchasing program towards the end of 2013 and wrap up in 2014.
"The FOMC [Federal Open Market Committee] was more hawkish than we had expected," wrote Goldman Sachs economists Jan Hatzius and Sven Jari Stehn. "Our takeaway is that the risk to our forecast of quantitative easing tapering starting in December has increased."
Bernanke's comments triggered a huge market selloff Wednesday, with the Dow closing down more than 200 points. The benchmark 10-year yield continued to rise even further Thursday to 2.425 percent, hitting its highest level since August 2011. Gold prices tumbled to their lowest in more than 2-1/2 years and silver fell more than 6 percent.
European shares were deeply in the red across the board with the FTSEurofirst 300 index down more than 2 percent. Markets in Asia were slammed, with the Japanese Nikkei closing down nearly 2 percent. South Korea's Kospi and the Shanghai Composite traded near 2013 lows.
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Adding to woes in Asia, China's HSBC Flash Purchasing Manager's Index, a preliminary reading of manufacturing activity, fell to a nine-month low in June.
On the economic front, jobless claims jumped 18,000 to a seasonally adjusted 354,000 last week, according to the Labor Department. Economists polled by Reuters had expected a reading of 340,000 last week. The four-week moving average for new claims rose 2,500 to 348,250.
At 10 am ET, existing home sales, leading indicators and the Philadelphia Fed survey are all scheduled to be reported.
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In addition, Microsoft announced a major change to its Xbox One videogame console, saying it will no longer require an Internet connection to play offline games. It also dropped all restrictions on trading games, and did away with region-locking restrictions.
Also, Facebook is scheduled to hold a press event at its headquarters later this afternoon. While the social network has not confirmed a product launch, it is widely expected it will announce a video function for its photo-sharing app, Instagram.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
THURSDAY: PMI manufacturing index, existing home sales, Philadelphia Fed survey, leading indicators, natural gas inventories, Fed balance sheet/money supply, Eurogroup finance ministers meet, Best Buy shareholder mtg; Earnings from Oracle
FRIDAY: Quadruple witching; Earnings from CarMax
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