(Bloomberg) — Stocks rose after the latest jobless claims data showed the labor market is cooling only gradually — rather than rapidly slowing amid elevated Federal Reserve rates.
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In the run-up to Jerome Powell’s speech in Jackson Hole on Friday, equities rose in early New York trading — with the S&P 500 less than 1% away from its all-time high. Treasury yields and the US dollar were mildly up.
Applications for US unemployment benefits barely rose, indicating the labor market is moderating only gradually. Initial claims increased by 4,000 to 232,000 in the week ended Aug. 17. The four-week moving average, which smooths out some of the volatility, fell to the lowest in a month.
“Investors may look past today’s ‘middle-of-the-road’ jobless claims and focus on next week’s inflation data and Nvidia earnings,” said Chris Larkin at E*Trade from Morgan Stanley. “Recession jitters may have receded, but the markets are still probably more concerned about the economy cooling too much rather than reheating.”
Larkin says the latest jobless claims numbers suggest the labor market is slowing but resilient, and that should help keep the Fed on course for September.
At Evercore, Stan Shipley says Thursday’s claims figures were a “yawn” for Treasury yields — though they suggest the job market is “not cratering.”
The recent economic data will help shape Powell’s latest assessment of the labor market ahead of a speech Friday. Policymakers have recently turned their attention to the labor side of their dual mandate now that inflation has come down from its pandemic peak. Fed Bank of Kansas City President Jeffrey Schmid said he wants to see more data before supporting rate cuts.
S&P 500 contracts rose 0.3%. Peloton Interactive Inc. rallied as a profit beat signaled the struggling fitness company’s turnaround efforts are starting to bear fruit. Snowflake Inc. plunged as a sales outlook failed to reassure investors that the company will gain ground in the market for artificial intelligence software tools.
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