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Investors to Focus Thursday on Jobless Claims, Earnings

Weekly jobless claims is the number to watch Thursday for clues about the already much-anticipated March jobs report.

Job seekers wait in line to have their résumés reviewed at the second annual Anaheim/Orange County Job Fair.
Robyn Beck | AFP | Getty Images
Job seekers wait in line to have their résumés reviewed at the second annual Anaheim/Orange County Job Fair.

“It’s survey week, so they’re going to take on a little bit more significance,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “The four-week moving average is going to continue to grind lower in my opinion.”

The weekly unemployment claims are for the week ending last Saturday, the same week used in the survey for March’s nonfarm payrolls. The weekly number is viewed as one of the more reliable indicators of employment activity.

“Let’s say we’re at 350,000 tomorrow. You’re looking at a four-week moving average of 355,000 to 356,000,” said LaVorgna. He currently expects nonfarm payrolls for March to show that 300,000 jobs were created, well above February’s 227,000.

“Generally I look at the change in claims between the survey week and four week averages to get a sense of the momentum of the labor market,” said J.P. Morgan economist Michael Feroli. “So if it came in 325,00, you might think it even accelerated over what we’ve seen in the last few months.”

On the other hand, if the number was 375,000 it might signal the labor market has weakened, he said.

As of now, Feroli expects March nonfarm payrolls to be about even with February’s. The monthly jobs report will be released on April 6, which is Good Friday and a day when the stock market is closed but the bond and some futures markets are opened on a modified schedule.

The claims are reported Thursday at 8:30 a.m. ET. Leading indicators are reported at 10 a.m., and FHFA home prices are also released at 10 a.m.

“If you go back and look over time that kind of growth in leading indicators we’re seeing suggests there’s no chance at all we head into a recession any time soon,” said John Canally, investment strategist and economist at LPL Financial. “It looks like it’s going to be up 0.6 percent. I think what that data is going to tell you is we’re solidly in the middle of the cycle.”

There are also several earnings of note Thursday, including FedEx, Dollar General, Lululemon, and Gamestop before the bell. Nike and Accenture report after the close.

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FedEx results are also watched for what they say about the economy.

“At the end of February, early March, we saw that Apple was buying air freight capacity to ship their iPads,” said Kevin Sterling, BB&T transportation analyst on “Power Lunch.”

“And with it, we saw rates spike as much as 20 percent and those rates have stayed at a high level since then. So demand has been strong. We think FedEx is going to give a positive outlook tomorrow regarding an improving air freight market,” said Sterling.

What Else to Watch

Nymex crude rose more than 1 percent Wednesday and was trading above $107 in afternoon trading, after a drop in oil inventories.

Traders said there was speculation President Obama could announce Thursday a fast tracking of the approval process for the Keystone Pipeline’s southern stretch from Cushing, Okla., where crude is stored, to the Gulf Coast. Obama speaks just before 11 a.m.

Gasoline has become a hot topic in the presidential election, but so far analysts see little impact on the consumer. That could change however, if prices continue to rise. Consumer sentiment has already slipped.

“If we get some kind of resolution in Iran, I think oil loses a good $10 to $15 dollars of geopolitical risk. Then you’re back to $90 and we’re not having conversation about high gasoline prices. I think right now at the level it’s at today, we could be ok,” he said. But Canally said it’s more likely gasoline will continue to rise to a level above $4.25 by summer. According to AAA, the national average Wednesday was $3.86 per gallon at the pump.

He does see one relative positive for the consumer, relative to last year. “This time you’re getting higher oil prices, which means higher gasoline prices, but you’re getting lower grocery prices,” Canally said. Last year, food and gasoline were rising together.

Euro Woes

Markets closed mixedWednesday, with stocks fluctuating throughout the day and rates lower. Still, the Nasdaq hit a fresh 11-year high. The dollar index rose, and the euro was under pressure.

Even as markets have been calmer about Europe since Greece’s debt restructuring, traders have been increasingly wary of rising Spanish bond yields.

“Spain has replaced Italy as the lighting ride because (Italian Prime Minister Mario) Monti’s doing such a good job. Year-to-date, Italy’s 10-year bond yield has dropped 197 basis points. Spain is up 37 basis points,” said Marc Chandler, chief currency strategist at Brown Brothers Harriman. The Spanish 10-year was at 5.397 Wednesday, up from about 5.15 percent a week ago.

Spanish yields have been rising after Spain said it needed to run a bigger budget deficit several weeks ago. Spanish bond yields have risen faster than Italy’s but Italian yields also rose Wednesday as investors moved to the safety of German bunds. The Italian 10-year yield was above 5 percent for the first time in two weeks.

Chandler said one interesting phenomena recently has been the noticeable change in correlation between the euro and other risk assets. With the S&P 500, its 50-day correlation with the euro was at 85 percent in December, and has now fallen to the lowest of the year at 44 percent.

He said he is also watching the Netherlands. “They’re going to miss this year’s target and next year’s target unless they have more savings. This means the problem is coming closer to the core, not just the periphery,” he said.

Follow Patti Domm on Twitter: @pattidomm

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  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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