The Dow snapped out of its single-day slump on Thursday, racing toward a triple-digit rally as the stock market basked in brighter trade war sentiment.
Adding to the bullish mood, an important data release came in stronger than expected, demonstrating that the US economy continues to hum along toward steady growth.
Wall Street’s three most closely watched indices rose in unison on Thursday.
The Dow Jones Industrial Average surged 163.08 points or 0.59%, lifting the index to 27,655.64.
The Nasdaq followed closely behind, advancing 44.52 points or 0.53% to 8,455.14.
The S&P 500 lagged its peers, rising 13.55 points or 0.44% to 3,090.33.
The risk-on mood triggered a spike in bond yields, which rise as bond prices decline. The yield on the 10-year US Treasury note jumped to 1.89%, its highest point since mid-September. The 30-year Treasury bond ranged as high as 2.38%.
Gold, which tends to bounce on trade war volatility, declined nearly 0.5% to $1,485.
The primary catalyst for Thursday’s rally was the stunning news that the US and China have agreed in principle to roll back tariffs as part of the long-awaited “phase one” trade agreement.
Risks remain, including the likelihood of delays. Nevertheless, Wall Street was pleased to receive confirmation that the deal, whenever it arrives, should begin unwinding at least some of the tariffs that have damaged both the US and Chinese economies.
That wasn’t the only good news the US economy received today. Weekly jobless claims also fell more than expected, the latest evidence that growth – while slowing – isn’t on the brink of sliding into reverse.
According to the Labor Department, weekly jobless claims declined to 211,000 for the week ended Nov. 2, notching a one-month low and beating economist estimates of 215,000.
Some Wall Street analysts had begun to fear that shrinking demand for labor would lead to a rise in jobless claims. That would present a severe threat to the economy because strong consumer spending has helped buttress the expansion – and offset the manufacturing recession.
Job creation has slowed, but that data point hasn’t dovetailed with an increase in firings. At least not yet.
If that begins to change, cracks could begin to form in consumer data, and the canary in the coal mine will be an uptick in unemployment claims.
“The question is when things for the consumer begin to change, when that leads to a pick up in firings, jobless claims will be the high frequency number that captures that on a weekly basis,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, told CNBC.
This article was edited by Sam Bourgi.