U.S. stocks dropped Thursday despite modest gains in Europe and Asia as investors look cautiously to Friday’s U.S. monthly jobs report, the last one before the U.S. Federal Reserve decides on whether to begin increasing interest rates before the end of the year. The U.S. Labor Department said Thursday the number of people applying for unemployment benefits climbed at the end of October by 16,000 to 276,000, higher than economists had expected.
“It’s going to be a quiet day,” Matthew Tuttle, chief executive of Tuttle Tactical Management in Stamford, Connecticut, told Reuters. “I think tomorrow’s going to be where the real action is.”
Friday’s jobs report will come two days after Federal Reserve Chairwoman Janet Yellen hinted strongly that U.S. rates could begin rising next month, suggesting the U.S. economy is strong enough for borrowing rates to begin rising for the first time in nearly a decade. The comments sent the U.S. dollar to a three-month high against a basket of global currencies. Higher rates increase the cost of borrowing for business activity while a stronger dollar adversely impacts companies’ overseas profits. Both factors encourage investors to seek shelter in government bonds.