FOX Business: The Power to Prosper
A round of encouraging data on the U.S. economy overshadowed ongoing concerns that Europe's debt crisis is spreading across the globe, lifting stock-index futures into the green.
New claims for unemployment benefits fell to 388,000 last week from 393,000 the week before. Economists had expected an increase to 395.000. The number of individuals applying for first-time unemployment benefits has been stuck around the 400,000 level for months in a sign that the labor market is still struggling to find its footing.
Two measures of new home construction topped Wall Street's estimates. New housing starts fell 0.3% in October from September to a 628,000 unit rate, topping expectations of 610,000. Meanwhile permits to build new homes, considered a more forward-looking indicator, jumped 10.9% to a 653,000-unit rate, soaring past estimates of a 603,000-unit rate.
A regional report from the Philadelphia Federal Reserve, on tap for later in the morning, is expected to show manufacturing in the mid-Atlantic region expanded at a slightly quicker pace in November than in October. The Philadelphia report is considered to be one of the key regional Fed reports on the manufacturing sector.
Ongoing Concerns Over European Debt Contagion
The debt crisis that started in the euro zone's periphery, in countries like Portugal, Ireland and Greece, is rapidly beginning to impact Europe's core economies, and other nations across the globe. Indeed, a report from Fitch saying the crisis poses "serious risks" to U.S. banks ignited a powerful selloff that shoved the blue chips 1.3% into the red in the final hour of trading on Wednesday.
Market participants have been paying particularly close attention to European debt yields, or the cost the countries need to pay lenders to borrow funds on the private markets. Higher yields reflect a greater implied risk premium, and make it more expensive for the country in question to refinance its sovereign debt.
Spain was forced to pay an average yield of 6.975% to sell a batch of $4.8 billion of 10-year bonds -- a euro-era high, and within easy reach of the 7% that prompted Ireland, Portugal and Greece to need a bailout from the European Union and International Monetary Fund. Investors also demanded France, Europe's second-biggest economy, which retains a top-notch "AAA" credit rating, pay 2.82% in its auction, up from 2.31% at the last one.
Additionally, the price to insure the debt of many European countries climbed on Thursday, according to data from London-based Markit.
The fear investors are facing is that the crisis may boil over, and materially affect economies that are too large to be bailed out, but are also systemically important.
European blue chips tumbled 1%, while the euro fell 0.03% to $1.346. Traders have been piling into U.S. Treasuries -- seen as a global safe-haven asset. The benchmark 10-year note yields 1.991% from 1.997%.
Oil was under heavy selling pressure after rallying on Wednesday, and topping $100 for the first time since July. The benchmark crude oil contract traded in New York slid $1.95, or 1.9%, to $100.67 a barrel, tracking weakness in global equity markets. Wholesale RBOB gasoline tumbled 5 cents, or 2%, to $2.58 a gallon.
In metals, gold fell $27.30, or 1.5%, to $1,747 a troy ounce.
European blue chips slid 1%, the English FTSE 100 dropped 1.6% to 5,423 and the German DAX fell 1.1% to 5,850.
In Asia, the Japanese Nikkei 225 rose 0.19% to 8,480 and the Chinese Hang Seng slipped 0.76% to 18,817.