Signs of Labor Market Cooling Boost Equities

Last Updated: Thursday, December 8, 2022 4:27 PM | MT Newswires

US benchmark indices notched gains on Thursday after weekly continuing unemployment claims jumped to the highest level since February, adding to signs that the labor market may be softening.

The Nasdaq Composite rose 1.1% to 11,082, while the S&P 500 gained 0.8% to 3,963.5. The Dow Jones Industrial Average added 0.6% to 33,781.5. Technology, consumer discretionary, and healthcare were the top performers among the sectors. Communication services and energy ended in the red.

In economic news, seasonally adjusted initial unemployment claims in the US rose by 4,000 to 230,000 in the week ended Dec. 3, the Department of Labor said. The consensus on Econoday was for a 228,000 print. Continuing claims advanced to 1.67 million from 1.61 million.

"The upturn in the trend in initial claims is evidence that the labor market is softening, and it's just a matter of time before payroll growth weakens," Pantheon Macroeconomics Chief Economist Ian Shepherdson said in a note.

Ahead of next week's Federal Open Market Committee meeting, the market is increasingly sensitive to data points, Stifel said in a note. "A continued retreat in producer price pressures will increasingly secure a smaller rate hike of 50 (basis points) come Wednesday," Stifel Chief Economist Lindsey Piegza said. "However, a larger-than-expected rise, or worse, a reversal in the downward trend could undermine the Fed's plans for a pivot to a less aggressive policy."

The US 10-year yield increased 8.3 basis points to 3.49%, and the two-year rate advanced 6.2 basis points to 4.32%.

West Texas Intermediate crude-oil futures fell 0.8% to $71.43 per barrel.

In company news, Nvidia (NVDA) shares rose 6.5% after Tigress Financial maintained its buy rating on the technology giant's stock while adjusting the price target to $250 from $310. "(Nvidia's) ongoing new product introductions, expanding functionality, and increasing partnerships with industry-leading technology service providers will continue to drive accelerating business performance trends," the firm said in a note. Shares were among the top performers on the S&P 500 and the Nasdaq.

Gold rose nearly 1% to $1,800.3 per troy ounce, while silver increased 1.5% to $23.27 per ounce.

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