US stocks were higher on Thursday as investors looked again to labor market data for signposts to the path of interest rates.
The Dow Jones Industrial Average (^DJI) lagged the other major averages, rising about 0.2%. Meanwhile, the S&P 500 (^GSPC) popped 0.5% and the Nasdaq Composite (^IXIC) pointed to a rebound for tech stocks, rising 0.8%.
Signs this week that the labor market is finally getting back to normal point to the Federal Reserve’s anti-inflation interest rate hikes as having their desired impact. With a soft landing for the economy looking more likely, traders have been betting on a Fed policy shift to cut rates.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
But the market’s nerve was rattled Thursday after leaders at the Bank of Japan hinted the end of the central bank’s negative interest rate regime is near. That prospect helped drive the 10-year Treasury yield (^TNX) up as much as 8 basis points to 4.18%.
Adding to the caution was growing speculation that stocks are primed for a pause after their blistering November rally, given December is usually a “boring” month for the markets.
The latest weekly jobless claims data revealed 220,000 claims were filed in the week ending Dec. 2. The number came in line with what economists surveyed by Bloomberg had expected and was up just 2,000 from the week prior, largely reflecting limited increases in layoffs.
But the crucial monthly US jobs report on Friday will be the real test of inflation and interest rate expectations before the Fed’s last meeting of the year next week.
In commodities, oil prices regained some ground after hitting a five-month low. West Texas Intermediate futures (CL=F) and Brent (BZ=F) crude futures, the international benchmark price, both rose about 1%.
JJobless claims come in flat again but don’t lose track of this indicator in 2024
Jobless claims were roughly flat in the week ending December 2.
Sitting at 220,000, a chart from Jefferies shows that despite some mid-year volatility, the 4-week moving average is largely unchanged since the end of winter.
The roughly flat trend in jobless claims reflects a labor market that’s remained relatively steadfast despite some signs of loosening, particularly with overall unemployment picking up over the last several moths.
Despite recent staleness, Deutsche Bank’s chief US economist Matthew Luzzetti believes claim filings will still be an indicator to watch in 2024. If the weekly jobless claims print breaks out of its current pattern it could be a sign the economy is slowly tipping into recession, per Luzzetti.
“Initial jobless claims are going to be kind of our best high frequency read on what’s what’s happening [in the labor market],” Luzzetti told Yahoo Finance at a media roundtable on Wednesday.
Deutsche Bank has projected a mild recession in the first half of the year with the unemployment rate hitting 4.5%.
“If that [jobless claims number] moves up into the, you know, 230 to 250 range on an average basis and kind of stays there, that’d be something that I think is more more in line with our forecast,” Luzzetti said.
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Stocks open in the green
US stocks were higher on Thursday as investors looked again to labor market data for signposts to the path of interest rates.
The Dow Jones Industrial Average (^DJI) lagged the other major averages, rising about 0.2%. Meanwhile, the S&P 500 (^GSPC) popped 0.5% and the Nasdaq Composite (^IXIC) pointed to a rebound for tech stocks, rising 0.8%.
The latest weekly jobless claims data revealed 220,000 claims were filed in the week ending Dec. 2. The number came in line with what economists surveyed by Bloomberg had expected and was up just 2,000 from the week prior, largely reflecting limited increases in layoffs.
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