Wall St gains as jobless claims data reinforce rate-cut hopes
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., May 8, 2024. REUTERS/Brendan McDermid/File Photo
By Shristi Achar A and David French
(Reuters) -U.S. stock indexes advanced on Thursday, drawing renewed upward momentum as weekly jobless claims data offered investors fresh hopes that a softening labor market could lead the Federal Reserve to cut interest rates this year.
U.S. central bank policy has been the main driver of investor sentiment in 2024. Renewed hopes for coming rate cuts have pushed the Dow Jones Industrial Average higher for the last seven sessions.
While next week’s producer and consumer prices readings are regarded as the next key signpost on interest rates, other data have buoyed investor rate-cut hopes.
The number of Americans filing new claims for unemployment benefits increased more than expected to a seasonally adjusted 231,000 last week, data showed. Economists polled by Reuters had forecast 215,000 claims.
“I would consider jobless claims a Fed friendly data, moving in the right direction towards slowing the economy which should help bring down inflation,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
Last week’s data showing slowing job growth in April and job openings falling to a three-year low in March had investors pricing in one or two rate cuts by the Fed this year. Prior to that, traders were pricing in just one rate cut.
At 1:59 p.m. Eastern time, the S&P 500 gained 18.39 points, or 0.35%, to 5,206.06 points, while the Nasdaq Composite gained 36.02 points, or 0.22%, to 16,338.78. The Dow Jones Industrial Average rose 250.18 points, or 0.64%, to 39,306.57.
Ten of the 11 major S&P sectors rose, led by a 1.9% rise in the real estate index. Data center operator Equinix surged 10.3% after its first-quarter results.
On the flip side, chip designer Arm Holdings dipped 1.3% as its full-year revenue forecast came in below expectations. Bigger rival Nvidia, which is still to report this earnings season, slipped 1.7%.
Other tech megacap stocks generally traded higher, including Apple , Amazon.com and Meta Platforms META.O> rising between 0.5% and 1.3%.
Roblox slumped 20.5% after the video-gaming platform cut its annual bookings forecast, in a sign that people were dialing back spending amid an uncertain economic outlook and elevated levels of inflation.
Robinhood Markets was 3.8% lower, despite the online brokerage beating estimates for first-quarter profit, thanks to robust crypto trading volumes and rate hikes that boosted its net interest revenue.
Meanwhile, Spirit Airlines jumped 12.1%, having hit a record low earlier this week.
(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru and David French in New York; Editing by Devika Syamnath, Shinjini Ganguli, Sweta Singh and David Gregorio)