Wall Street closed higher on Thursday, its first winning day of the week. Investor mood improved on jobless claims coming in higher, on expected lines, thereby acting as an indicator for the Fed to infer that its policies were showing results. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.6% or 183.56 points to close at 33,781.48 points. Twenty-two components of the 30-stock index ended in positive territory, while eight ended in negative.
The S&P 500 gained 0.8% or 29.59 points to close at 3,963.51 points. Nine of the 11 broad sectors of the benchmark index ended in positive territory. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY) and the Health Care Select Sector SPDR (XLV) increased 1.6%, 1% and 0.9%, respectively, while the Energy Select Sector SPDR (XLE) declined 0.5%.
The tech-heavy Nasdaq added 1.1% or 123.45 points to finish at 11,082.00 points.
The fear-gauge CBOE Volatility Index (VIX) decreased 1.7% to 22.29. A total of 10.1 billion shares were traded on Thursday, lower than the last 20-session average of 10.9 billion. The S&P 500 recorded 15 new 52-week highs and three new lows, while the Nasdaq posted 82 new highs and 232 new lows.
Jobless Claims Report Sparks a Relief Rally
Wall Street is currently in a “bad news is good news” territory. Recent sessions have been dominated either by the apprehension of an economic downturn arising out of continued monetary policy tightening or economic indicators suggesting that the Fed might already be convinced that its measures have started taking effect and would go slow in its pace of rate hikes. Wednesday’s trade was boosted by the latter, with jobless claims for the week coming in high.
The Labor Department said on Thursday that initial jobless claims rose to 230,000, increasing by 4,000 for the week ending Dec 3, from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 225,000 to 226,000. The four-week moving average increased to 230,000, marking a rise of 1,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 228,750 to 229,000.
Continuing claims came in at 1,671,000 for the week ending Nov 26, increasing 62,000 from the previous week’s revised level. The previous week’s numbers were revised up by 1,000 from 1,608,000 to 1,609,000. The four-week moving average came in at 1,582,250, an increase of 43,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 1,538,750 to 1,539,000.
These job numbers come in as a counter to last Friday’s labor market report, which had shown employers hiring more workers and wage had increased. Usually, strong economic data is good news for the market. However, such are times that investors cheered seeing an increased number of Americans filing claims for jobless benefits last week and unemployment rolls hitting a 10-month high toward the end of November.
The general consensus is that this might again push the Fed into contemplating that its measures have actually started taking effect and it would turn more dovish, thereby bringing down treasury yields and attaining a soft-landing of the economy. Currently, bets are on the central bank raising rates by 50 basis points at its Dec 13-14 policy meeting. But these jobs numbers certainly did enough on the day to send the market into a relief rally in a week which is likely to end in losses, that too well into the holiday season. The biggest gainers on the day were technology and consumer discretionary stocks.
Consequently, shares of Hyatt Hotels Corporation H and Amazon.com, Inc. AMZN rose 1.8% and 2.1%, respectively. Hyatt Hotels carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Hyatt Hotels Corporation (H) : Free Stock Analysis Report
To read this article on Zacks.com click here.