Stocks surged on Thursday after a higher-than-expected number of jobless claims helped ease recession fears sparked by last week’s weaker-than-expected jobs report.
The Dow Jones Industrial Average rose 683 points, or 1.8%, while the Nasdaq Composite Index rose 2.9%. The S&P 500 rose 2.3%. Best day since November 2022According to CNBC.
Initial claims for unemployment benefits fell by 17,000 to 233,000 last week, according to data released by the Labor Department on Thursday, in a small but encouraging sign for the labor market.
Stocks tumbled on Monday amid growing concerns about the overall health of the U.S. economy, more than a year after the Federal Reserve raised interest rates to their highest level in 23 years.
The Fed is widely expected to start cutting interest rates next month after inflation fell 3% year-on-year and 0.1% month-on-month in June, the first monthly decline since the pandemic began and moving closer to the Fed’s 2% target.
But the latest jobs report showed the unemployment rate rose to 4.3% last month, and a series of worrying earnings reports from major companies in the second quarter also added to concerns.
While the latest jobless claims numbers appeared to calm a shaken Wall Street, there are concerns that a so-called “soft landing” may be more difficult than expected.
“While low layoffs alone are not enough for the Fed to feel reassured about the state of the economy, it is part of the reason a soft landing is still possible,” said Diane Swonk, chief economist at KPMG. I wrote to X.
“But the Fed needs to make sure that worker demand doesn’t disappear completely. The market is not happy that the data doesn’t justify a rate cut between meetings, which was always going to be a very high hurdle for the Fed,” Swonk added.
