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CNN
—
U.S. stocks surged on Thursday after new data on the labor market suggested the economy was unlikely to fall into the downward spiral that traders had feared. The reassuring report lifted the major indexes, putting the S&P 500 and Nasdaq Composite on track to post their best day so far this year.
Data released Thursday by the Labor Department showed initial jobless claims last week fell to 233,000 from the previous week's upwardly revised total of 250,000.
“Anywhere within this range, it tends to suggest the labor market is pretty healthy,” economist Joseph Brusuelas wrote on X on Thursday morning.
Economists had expected new claims for unemployment benefits to reach 240,000 in the week ending August 3.
The latest U.S. labor market update has set off a gloomy sentiment across global markets since the Bureau of Labor Statistics said on Friday that payrolls rose by just 114,000 last month, far less than expected and well below the 200,000 average over the past few months.
Thursday's better-than-expected data helped send the Dow Jones Industrial Average up more than 700 points in afternoon trading. The S&P 500 rose 2.3% and the Nasdaq Composite rose nearly 3%. Treasury yields also rose, with the 10-year Treasury yield, which had plummeted earlier this week after the disappointing July jobs report, back above 4%.
But Thursday's report wasn't all good news for the job market.
The report also showed that continuing claims, filed by people who have been receiving unemployment benefits for at least a week, rose to 1.88 million in the week ended July 27, remaining at or above that level for the ninth consecutive week.
Weekly jobless claims data is volatile and frequently revised. It remains near pre-pandemic levels.
The latest jobs report comes as Wall Street tries to recover from a market sell-off that was largely caused by July's weaker-than-expected jobs report. The unemployment rate rose to 4.3% from 4.1%, raising concerns that the U.S. economy is heading for a hard landing — a situation in which inflation is pushed down to the Federal Reserve's 2% target, but at the expense of a healthy labor market.
Markets around the world were suddenly gripped by fears on Monday that the world's largest economy might slow more quickly than expected, sparking big declines in all three major U.S. indexes, with the Dow Jones Industrial Average dropping more than 2.6% at one point and the Nasdaq dropping 6% before entering a correction.
Chris Larkin, managing director of trading and investments at E-Trade, said Thursday's jobless claims data “may ease some of the concerns raised by last week's weak jobs report.”
But with investor attention beginning to shift from the labor market to the key Consumer Price Index inflation report due next Wednesday, “it is unclear to what extent this will move sentiment,” Larkin said in a statement Thursday.
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