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Bolstered by initial jobless claims data that suggested some loosening in the labor market, stocks rallied in the early stages of Thursday’s session. The S&P 500 is on track to break a five-session losing streak, which was caused by concern ahead of the Federal Reserve’s policy meeting next week.
The S&P (SP500) +1.0%, Nasdaq (COMP.IND) +0.7% and Dow (DJI) +0.7% started the session in the green.
Weekly jobless claims rose to 230K, as expected. Continuing claims rose to 1.671M, topping the forecast of 1.6M and possibly given the Fed something to think about on the labor market.
“The four-week average now stands at 230K, the highest since early September, having jumped from a low of just 206K in early October,” Pantheon Macro said. “Claims are noisy, especially from Thanksgiving through mid-January, and we expect numbers closer to 215K over the next couple weeks. But we think the trend will be materially higher once the holiday seasonal adjustment distortions fade.”
Rates rebounded a little from recent declines, The 10-year Treasury yield (US10Y) rose 7 basis points to 3.48% and the 2-year Treasury yield (US2Y) rose 4 basis points to 4.30%.
It “seems more that the (bond) market is not done squaring positions into year-end,” ING said. “At the same time the market is increasingly adding to the rate cut expectations in the second half of 2023, further inverting this part of the money market curve.”
Traders are already looking forward to rate decisions from the Fed and ECB next week.
A “potentially dovish signal (if you squint hard enough) came from the Bank of Canada, which is acting as something of a prelude ahead of the Fed, ECB and BoE decisions next week,” Deutsche Bank’s Jim Reid said.
There “were signs of a future pause in their statement, which said the ‘Governing Council will be considering whether the policy interest rate needs to rise further’,” Reid noted. “That’s the first time since the tightening cycle began that they haven’t explicitly said they expect further rate hikes, instead using softer language like ‘considering’.”
Before the bell, weekly initial jobless claims numbers arrive. The consensus is for a tick higher to 230K.
Meme stocks were among active names. AMC Entertainment (AMC) rebounded some from a selloff after with a source saying it is in no risk of immediate restructuring. GameStop (GME) …….
