Futures rally, focus on the records as the markets try to extend the winning streak

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Futures rallied in Thursday’s after-hours session, suggesting Wall Street would extend yesterday’s gains – and possibly test new highs on Friday – after a rough start to the week.

On Thursday, stocks saw small gains in distance trading, but managed to extend an unlikely winning streak until a third day, as traders struggled to decipher the significance of a surprise rise in unemployment. .

The dizzying reversal of the Monday-Thursday mini-rally was part of the market’s attempt to calibrate a resurgence of COVID-19 cases against a searing economic expansion that continues to gain momentum. Even in the midst of turmoil and uncertainty, the main benchmarks are a striking distance from the records set just over a week ago.

Sentiment took a hit after data on Thursday showed an unexpected rise in jobless claims, which last week set a new pandemic-era low. New unemployment records jumped to 419,000 in the past week, well above consensus estimates of 360,000.

Since the onset of COVID-19, the data set has served as an avatar of the health of the labor market and could take on new significance if the rise in infections begins to trigger further restrictions – which could lead to another round job losses.

“As with the recent resurgence of COVID cases stemming from the Delta variant, the surge in unemployment claims is a disappointment. The recovery is never a perfect straight line,” noted Mark Hamrick, senior economic analyst at Bankrate.

Strong earnings helped the market recover from Monday’s pandemic-inspired slump, with investors focusing on fundamentals rather than increasing the number of coronaviruses.

This week, industry leaders Netflix (NFLX), Chipotle (CMG), Coca-Cola (KO), Johnson & Johnson (JNJ) and Verizon (VZ) exceeded market expectations, boosting a market that has experienced little decline in recent months.

On Thursday, Intel (INTC) Twitter (TWTR), Snap (SNAP) – the parent company of Snapchat, Southwest (LUV) and AT&T (T) joined the brigade with better than expected results, with both companies bolstered by a sharp increase post-containment request.

Monday’s massive selloff momentarily drew attention to quarterly earnings which almost uniformly reflected a strong rebound. The growing number of cases driven by the Delta variant – a more transmissible form of COVID-19 – has pushed the Dow (^ DJI), Nasdaq (^ IXIC) and S&P 500 (^ GSPC) at their biggest drop in months.

However, the signals from the bond market are significantly less enthusiastic. Analysts have pointed out that safe-haven Treasury bond yields have been the biggest beneficiary of COVID-19 fears, having soared in recent weeks on inflation fears.

This suggests that investors could be putting money into bonds due to nervousness about inflation or decline, or they sense weakness on the horizon – which may or may not be due to the stubborn persistence of COVID – 19.

“This move within 10 years [Treasury yield] is important, ”Bank of America chief economist Michelle Meyer told Yahoo Finance Live on Thursday. “Market participants say there is potentially a slowdown in this recovery, that downside risks have increased.”

7:21 p.m. ET Thursday Night: Stock Futures

Here are the main moves in the markets, at 7:21 p.m. ET:

  • Dow Futures (YM = F): 34 765, +56

  • Nasdaq Futures Contracts (NQ = F): 14 975, +47.75

  • S&P 500 Futures Contracts (ES = F): 4,370, +10.25

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Javier David is editor-in-chief for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

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