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Dow Plods Higher After Jobless Claims Plunge to 7-Month Low

Last Updated September 23, 2020 1:21 PM
Josiah Wilmoth
Last Updated September 23, 2020 1:21 PM
  • The Dow rose for a second consecutive day on Thursday.
  • Investors continue to imbibe on trade war optimism following a few days of sobriety.
  • US jobless claims plunged to a seven-month low.

The Dow climbed for a second straight session on Thursday. China gave a bittersweet update on the state of trade negotiations with the US, and investors desperate for a relief rally elected to ignore the “bitter” portion of that news.

Bolstering the recovery, US jobless claims plunged to a seven-month low, suggesting that the economy remains healthy despite a worse-than-expected job creation slump.

Dow Recoups Yesterday’s Pre-Bell Losses

dow jones industrial average chart
The Dow more than recouped the ground it lost during the final hour of trading on Dec. 4. | Source: Yahoo Finance 

Wall Street’s three major indices extended their midweek recovery on Thursday, more or less recouping the ground they lost in the minutes before Wednesday’s closing bell.

The Dow Jones Industrial Average rose 41.49 points or 0.15% to 27,691.27.

The S&P 500 climbed 2.56 points or 0.08% to 3,115.32, and the Nasdaq ticked 10.22 points or 0.12% higher to 8,576.89 to round out a positive morning for equities.

The Cboe VIX fell again, while the risk-on mood caused US Treasury bond yields to tick higher. A weaker US dollar buttressed the gold price, despite the pivot away from haven investments.

Stock Market Exhales After Trade War Settles Back into Comfortable Stagnancy

President Donald Trump upended the outlook for US-China trade negotiations with an off-the-cuff remark earlier in the week, but the narrative has waded back into familiar territory over the past two days.

Trump has returned to his semiregular habit of proclaiming that talks are going “very well,”  and Beijing has reciprocated  by acknowledging that negotiators remain in “close contact.”

Of course, Chinese Ministry of Commerce spokesman Gao Feng also said that Beijing hasn’t wavered from its demand that the phase one trade deal must include tariff rollbacks . But the US stock market appears desperate for a relief rally, and a return to the status quo seems to be as good a catalyst as any.

Jobless Claims Unexpectedly Decline

Dow futures were already pointing to solid gains when the Labor Department released its weekly jobless claims report , but the data put the cherry on top of today’s stock market bounce.

Initial claims for state unemployment benefits fell to a seven-month low last week. Just 203,000 Americans filed jobless claims, well below the economist estimate of 215,000.

US jobless claims chart
US jobless claims slid to a seven-month low during the last week of November. | Source: Trading Economics 

This data release may help ease concerns about Wednesday’s ADP non-farm payrolls report, which showed that job creation had slowed to just 67,000 new jobs in November.

Considering that manufacturing and services PMI also came in worse than expected, this week’s economic data had been less than inspiring for Dow bulls.

The Labor Department’s monthly employment report is due on Friday, and economists predict that the unemployment rate will hold steady at a five-decade low of 3.6%.