US close: Stocks rise as jobless claims top forecasts

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09:20 05/11/24

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Wall Street saw gains in its major indices as the closing bell rang on Thursday, with investors closely monitoring the latest jobless claims figures from the Labor Department.

The Dow Jones Industrial Average climbed by 0.85%, closing at 39,387.76, while the S&P 500 posted gains of 0.51% to reach 5,214.08, and the Nasdaq Composite managed a more modest increase of 0.27% to 16,346.26.

In currency markets, the dollar was last down 0.2% on sterling to trade at 79.85p, while it slipped 0.32% against the common currency to 92.74 euro cents.

Against the Japanese yen, the greenback dipped marginally, down 0.05% to last change hands at JPY 155.46.

“Today’s US initial jobless claims report is softer than expected for the first time in a while, marking the weakest weekly print in eight months,” said Ryan Brandham at Validus Risk Management.

“After a period of remarkable strength and resilience, signs are growing that the US labour market may be starting to soften.”

Brandham noted that last Friday also saw a weaker-than-expected US employment report.

“If the US labour market is softening, it should help the Fed in the fight against inflation, even if it is hoping to tame inflation without materially impacting the labour market.

“It’s expected that US yields move lower in response to today’s report.”

Jobless claims top forecasts for the first time in four weeks

In economic news, the Department of Labor indeed revealed that Americans filed for unemployment benefits at a brisk pace in the week ended 4 May, reaching a nine-month high.

Initial jobless claims rose by 22,000 to 231,000, surpassing market projections of 210,000 and marking the highest level since August 2023.

The unexpected uptick halted a streak of four consecutive weeks of lower-than-expected claims, signalling a weakening in the labour market.

The four-week moving average, designed to smooth out volatility, rose by 4,750 to 215,000, while continuing claims saw an increase of 17,000 to 1.78 million.

On a non-seasonally adjusted basis, claims climbed by 19,690 to 209,324, with notable spikes observed in states such as New York, California, Indiana, and Illinois.

Across the Atlantic, the Bank of England opted to maintain its benchmark interest rate at 5.25% during its meeting earlier, aligning with widespread expectations.

However, the central bank hinted at potential future rate cuts.

The decision marked the sixth consecutive meeting in which the Bank held rates steady, despite recent data from the Office for National Statistics indicating a moderation in consumer price inflation.

In March, the inflation rate eased to 3.2% in March from 3.4% in February, following a peak of 11.1% in October 2022.

The Monetary Policy Committee voted 7-2 in favour of maintaining the status quo, with members Swati Dhingra and Dave Ramsden advocating for a rate reduction to 5%.

That contrasted with the March meeting, where the MPC voted 8-1 to keep rates unchanged, with only Dhingra advocating for a cut.

Airbnb and Robinhood in the red, Warner Bros manages gains

In equity markets, Airbnb slid 6.87% despite reporting better-than-expected first quarter results in both revenue and earnings, as weak guidance overshadowed its performance.

Robinhood Markets dropped 3.08% even after it exceeded analysts' expectations for earnings and revenue in the first quarter.

On the upside, Warner Bros Discovery advanced 3.08% despite falling short of expectations for both revenue and earnings in the first quarter.

Reporting by Josh White for Sharecast.com.

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