U.S. stocks advanced on Thursday after weekly data showed continuing jobless-benefit claims rose to the highest levels since February, suggesting economic growth may be slowing and inflation moderating ahead of next week’s Federal Reserve policy meeting.
How are stocks trading
- The S&P 500 SPX, +0.72% advanced 24 points, or 0.6%, to 3,958.
- The Dow Jones Industrial Average DJIA, +0.67% is up 183 points, or 0.6%, to 33,781.
- The Nasdaq Composite COMP, +1.70% gained 104 points, or 1%, to 11,063.
The S&P 500 declined 7 points, or 0.19%, to 3934, on Wednesday, cementing a five-day losing streak — its longest since Oct. 12.
What’s driving markets
Investors cheered weekly data Thursday showing the number of continuing jobless-benefit claims rose to the highest level since February, which was interpreted as reducing some of the pressure on the Federal Reserve to continue to raise interest rates, said Richard Farr, chief market strategist at Merion Capital Group.
“The small increase in unemployment claims may be viewed by some as a reason to reduce recession odds,” Farr said.
Markets have been pricing in a greater chance of a sharp economic downturn next year since the start of the month, as Treasury yields, oil prices and stocks have fallen, Farr said.
See: U.S. jobless claims climb to 230,000 in sign labor market may be slowly cooling off
Treasury yields climbed Thursday though with the yield on the 10-year Treasury note TMUBMUSD10Y, 3.470% rising 6 basis points to 3.474%, although yields were still lower than they were at the start of the month.
Recent moves in markets suggested that “recession risks have started to overshadow inflation in the eyes of investors,” said Marios Hadjikyriacos, senior investment analyst at XM.
Crude-oil futures CL.1, +0.58% were trading at $72.37 per barrel, having dropped more than 40% from its March highs.
Investors have been focused on the U.S. labor market lately. Last week, data showing hotter-than-expected acceleration in wage growth, along with a more robust labor market, sent stocks sharply lower as investors surmised that the Fed’s efforts to counter inflation weren’t having their intended effect.
Fed Chairman Jerome Powell has repeatedly said that unemployment will likely need to rise in order for the Fed to succeed in suppressing the worst inflationary wave in four decades. The Fed is expected to hike interest rates by 50 basis points when it meets next week.
The takeaway from Thursday’s weekly jobless claims data is that it’s taking unemployed Americans slightly longer to find work, according to Neil Dutta, head of economics at Renaissance Macro Research, in a note.
“At face value, the rise in continuing claims relative to the flat movement in initial claims implies that it is taking somewhat longer for those recently unemployment to find new jobs — the opposite of what we saw earlier this year,” Dutta said.
Which companies are in focus
- Exxon Mobil Corp. XOM, +1.40% rose after the oil company said Thursday it will buy back up to $50 billion in stock through 2024, including $15 billion in 2022.
- Tesla Inc. TSLA, -2.20% shares are sharply lower again on Thursday; shares are now down 51% so far this year.
- GameStop Corp. GME, +8.58% was higher despite a disappointing quarterly earnings report.
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