Stocks Retreat Despite Encouraging Initial Jobless Claims Report

Fitch Downgrades Evergrande To “Restricted Default”

S&P 500 futures are losing ground in premarket trading as traders take some profits off the table after the recent rally.

Fitch Rating has recently downgraded China Evergrande Group to “restricted default”, a move which may put some pressure on global markets. Worries about Evergrande‘s financial health and the potential domino effect among China’s developers have put some pressure on markets before, but traders were able to shrug off fears of financial contagion.

It remains to be seen whether global markets will pay close attention to Evergrande‘s misfortunes as traders are mostly focused on Omicron and the outlook for Fed’s policy.

Initial Jobless Claims Decline To 184,000

U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report indicated that 184,000 Americans filed for unemployment benefits in a week. Analysts expected that Initial Jobless Claims would total 215,000. Continuing Jobless Claims increased from 1.96 million to 1.99 million compared to analyst consensus of 1.9 million.

The better-than-expected Initial Jobless Claims report may fail to provide additional support to stocks. The job market is strong, so the Fed will have an opportunity to reduce its asset purchase program at a fast pace.

Traders should keep in mind that an ultra-important Inflation Rate report will be published tomorrow, so trading may be choppy as market participants prepare for this event.