AMZN Amazon.com Inc

By Anna Hirtenstein 

Global stocks fell Thursday ahead of data that is likely to show that the U.S. economy shrank during the second quarter at the steepest pace since World War II, providing fresh insight into the damage wrought by the coronavirus pandemic.

Futures tied to the S&P 500 traded down 0.8%, suggesting that U.S. stocks may decline after the opening bell. The pan-continental Stoxx Europe 600 slipped 0.6%. Most major Asian stock benchmarks dropped by the close of trading.

Investors will get a view into the disruption to the economy in the months with the most stringent lockdowns when the Commerce Department releases initial estimates on how much gross domestic product shrank in the three months ended June 30 at 8:30 a.m. ET. Economists project second-quarter GDP fell at a seasonally adjusted annual rate of 34.7% during the period, when states imposed lockdowns across the country to contain the virus and then lifted restrictions.

"It will give us a sense of how bad the situation was," said Sebastien Galy, a macro strategist at Nordea Asset Management. "The sense of the catastrophe and the realization around what happened is a powerful force. It may have some impact on consumption and politics."

The scope of the economic damage may also force U.S. lawmakers to come together faster on the terms of a fresh stimulus bill, he said.

The latest tally of weekly unemployment claims, also due out at 8:30 a.m., is likely to show an uptick in people who filed for benefits in the week ended July 25, suggesting that the recovery in the labor market may be faltering. The rise in infection rates across parts of the U.S. has forced some states and businesses to introduce fresh restrictions on commercial activity, which is expected to lead to a rise in unemployment.

Treasurys rose, with the yield on the benchmark 10-year bond slipping to 0.556%, from 0.578% on Wednesday. The U.S. dollar edged up 0.3%, but continued to hover near a 2-year low.

Among European stocks, Volkswagen declined about 5% in German trading after the automotive company posted a net loss for the second quarter and cut its dividend. Lloyds Banking Group dropped almost 9% in London after the lender unexpectedly posted a loss for the first half and increased the amount of money set aside to cover losses stemming from the pandemic's impact on the economy.

The string of U.S. companies scheduled to report earnings ahead of the opening bell on Thursday include Carlyle Group, Procter & Gamble and Mastercard.

Technology giants will take center stage after markets close, with Apple, Facebook, Amazon.com and Google's parent company Alphabet set to release their latest financial results. Those reports will show how tech companies are weathering the economic downturn and may even be benefiting from the lockdown measures, and offer insights into whether the Nasdaq Composite Index's recent rally may be sustained.

"We would say that the results will look more positive than the rest of the market, but a caveat is that expectations are higher as a result," said Raj Shant, a portfolio specialist at an affiliate of PGIM Group. "One overriding factor benefiting tech names is that the digitization of society has been pulled forward by at least a couple of years due to the lockdowns."

Gold edged down after notching a record on Wednesday, ending an eight-day rising streak. It slipped 0.3%, trading at $1,947.20 per troy ounce.

In Asia, Hong Kong's Hang Seng Index fell 0.7% by the end of trading, and Japan's Nikkei 225 closed down 0.3%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

July 30, 2020 05:22 ET (09:22 GMT)

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