U.S. stocks open lower after best day in three weeks as Friday’s jobs report keeps traders on edge

What’s driving markets

Treasury yields were volatile in early trade on Thursday, which helped to weigh on U.S. stocks as investors digested a batch of fresh economic data ahead of Friday’s all-important September jobs report.

A weekly report on jobless-claims data showed no sign that layoffs are increasing. Rising layoffs are seen as a necessary prerequisite for the Federal Reserve to start easing its monetary policy, which has weighed on both stocks and bonds since early 2022.

Government data showed the number of Americans who applied for unemployment benefits last week rose slightly to 207,000, but remained near pandemic-era lows. The data potentially boosted the case for more Federal Reserve interest-rate hikes, although investors will receive a more comprehensive monthly reading on the labor market Friday.

See: U.S. jobs report forecast: 170,000 new workers and 3.7% unemployment

Investors also received data on the U.S. international trade deficit which suggested some weakness in consumer spending, but analysts chiefly blamed the jobless claims numbers for any impact on markets.

“Treasurys were little changed ahead of the release and since the print the curve has steepened back to the recent extremes,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, in emailed commentary.

That initial move in yields has since reversed, but stocks remain under pressure as the S&P 500 seems to be drawn toward 4,200, which technical analysts have described as a key support level.

Several senior Fed officials are set to speak on Thursday, including Cleveland Fed President Loretta Mester, who spoke at the Chicago Payments Symposium at 9 a.m., and San Francisco Fed President Mary Daly, who is set to speak in New York at noon. Richmond Fed President Thomas Barkin is set to speak in North Carolina at 11:30 a.m. Eastern.

Choppy trading in recent days sent the Cboe VIX index
VIX,
a gauge of expected equity-market volatility, to 20 for the first time in four months as stocks tumbled. Some analysts see a near-term rebound ahead, but many believe the direction of bond yields remains critical for stocks.

Looking ahead to Friday, economists polled by The Wall Street Journal expect 170,000 jobs were created last month, which would be lower than the 187,000 created during the month prior.

Companies in focus

• Exxon Mobil‘s
  XOM,
  -1.32%
  shares fell after the company said rising crude prices are likely to boost its third-quarter profit by $1 billion, but thinner margins from chemicals will hurt profits by as much as $600 million. Analysts at RBC say that the update from Exxon is likely to result in earnings above consensus expectations but roughly in line with investor expectations.

• Rivian Automotive Inc. 
  RIVN,
  -17.54%
  shares tumbled after the EV maker said it plans to offer $1.5 billion worth of “green” convertible senior notes due in 2030, and issued preliminary sales estimates that met Wall Street’s expectations. Rivian stock rose by 9% on Wednesday.

• Clorox Co. shares
  CLX,
  -8.62%
  fell after the company cut its outlook following disruptions caused by a cyberattack first reported in August.