On Thursday, US stocks showed a positive trend and benchmark Treasury yields saw a rebound following strong labor market data. The S&P 500 and Nasdaq posted gains, driven primarily by the technology sector, while defensive sectors kept the Dow relatively stable.
A recent report from the Department of Labor revealed that initial claims for unemployment benefits have fallen to their lowest level since September 2022. This development has cast doubt on the likelihood that the Federal Reserve will initiate a cut to its key benchmark rate in March, as some had previously speculated.
Favorable economic data, along with concerns about potential conflicts in the Middle East, helped push Treasury yields higher. Greg Bassuk, CEO of AXS Investments, acknowledged the dilemma investors face. While a robust economy bodes well for corporations and investors, it dampens expectations of a rate cut in March.
Bassuk emphasized that investors, both bulls and bears, are closely following economic data, recognizing its significant impact on Fed policy throughout 2024.
According to CME’s FedWatch tool, financial markets are now pricing in a 55.7% chance of a Fed rate cut in March, up from 70.2% the previous week.
The Dow Jones Industrial Average saw a marginal decline of 0.04%, closing at 37,252.18. In contrast, the S&P 500 gained 0.46% and the Nasdaq Composite added 1.09%.
In European markets, stocks gained ground, supported by positive earnings reports, while investors also eagerly awaited the release of the minutes of the European Central Bank’s monetary policy meeting.
The pan-European STOXX 600 index rose 0.59% and the MSCI global equity gauge gained 0.46%.
Emerging market stocks rose 0.36% and MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.38% higher. However, the Japanese Nikkei saw a slight loss of 0.03%.
Strong jobless claims data gave a boost to US Treasury yields, suggesting the Federal Reserve could delay rate cuts for a longer period. The benchmark 10-year bond yielded 4.119%, while the 30-year bond yielded 4.3402%.
The dollar held its position near a five-week high against a basket of global currencies, with the dollar index rising 0.02%.
In the commodities market, crude oil prices advanced as the International Energy Agency (IEA) predicted strong global oil demand for the year. US crude oil rose to $73.20 per barrel and Brent to $78.26.
Gold prices rose due to rising geopolitical concerns, particularly in the Middle East. Spot gold added 0.4%, reaching $2,013.59 an ounce.
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