News Column

Upbeat Jobs Data Contributes To Modest Strength On Wall Street - US Commentary

August 7, 2014

WASHINGTON (Alliance News) - While buying interest has remained somewhat subdued, stocks have moved modestly higher in early trading on Thursday. The major averages have all moved to the upside after ending the previous session nearly flat.

In recent trading, the major averages have moved roughly sideways, hovering in positive territory. The Dow is up 38.86 points or 0.2% at 16,482.20, the Nasdaq is up 17.15 points or 0.4% at 4,372.21 and the S&P 500 is up 5.37 points or 0.3% at 1,925.61.

The early strength on Wall Street partly reflects a positive reaction to a report from the Labor Department showing an unexpected decrease in initial jobless claims in the week ended August 2nd.

The Labor Department said initial jobless claims fell to 289,000, a decrease of 14,000 from the previous week's revised level of 303,000.

The drop came as a surprise to economists, who had expected jobless claims to edge up to 305,000 from the 302,000 originally reported for the previous week.

The data provides another positive sign for the labor market but may also fuel further speculation about the Federal Reserve raising interest sooner than anticipated.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Bottom line, the trend lower in the pace of firings continues, which is a definite plus for the labor market."

"For the Fed, today's data point is another figure pointing out how far behind the reality of the data they are falling," he added.

Traders are also keeping an eye on developments overseas, where the European Central Bank kept interest rates unchanged as expected.

ECB President Mario Draghi noted that available information remains consistent with the bank's assessment of a continued moderate and uneven recovery of the euro area economy.

However, Draghi acknowledged that the dispute with Russia over its involvement in the conflict in Ukraine could hurt growth.

In response to sanctions from the US and Europe, Russian President Vladimir Putin signed an executive order instituting a one-year ban on certain food and agricultural products.

Utilities stocks have shown a strong move to the upside in early trading after falling sharply over the past few sessions. The Dow Jones Utilities Average has risen by 1.2%, bouncing well off yesterday's four-month closing low.

Defense, software, and tobacco stocks are also seeing some early strength, while most of the major sectors are showing only modest moves.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday. Hong Kong'sHang Seng Index dropped by 0.8%, while Australia's All Ordinaries Index edged down by 0.1%. However, Japan'sNikkei 225 Index bucked the downtrend and rose by 0.5%.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has fallen by 0.5%, the UK'sFTSE 100 Index and the German DAX Index are both down by 0.1%.

In the bond market, treasuries have moved modestly higher, adding to the slim gains posted over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.2 basis points at 2.462%.

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Source: Alliance News

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