Dow climbs to new record ahead of monthly U.S. jobs report
By Mark DeCambre and Sunny Oh
Nasdaq snaps streak of four straight losses
The Dow Jones Industrial Average booked a new record for a second straight day on Thursday in a volatile session that saw stocks swing to gains in the last hour of trading.
Investors were buoyed by a report showing weekly jobless benefit claims were at the lowest level in the COVID era, ahead of the April nonfarm payrolls and unemployment report due on Friday.
How are stock benchmarks performing?
On Wednesday (https://www.marketwatch.com/story/dow-futures-edge-higher-tech-sector-set-to-bounce-back-after-tuesday-selloff-11620214619?mod=market-snapshot), the Dow rose 97.31 points to close at a record 34,230.34, a gain of 0.3%, marking its 22 record closing high of 2021. The S&P 500 added 2.93 points, or 0.1%, finishing at 4,167.59, while the Nasdaq Composite Index fell 51.08 points, or 0.4%, to end at 13,582.42.
What's driving the market?
Initial unemployment claims in the U.S. fell (https://www.marketwatch.com/story/u-s-unemployment-claims-drop-below-500-000-for-first-time-since-pandemic-as-hiring-surges-11620305321) to 498,000 for first time in pandemic era, pointing to an improving labor market but also raising questions for some investors about the specter of rapidly rising inflation. The weekly claims are better than the previous week's total of 590,000, and come in better than Dow Jones estimate for claims of 527,000.
U.S. state continuing jobless claims rose 37,000 to 3.69 million and total U.S. continuing jobless claims dropped 404,509 to 16.2 million as of April 17.
"Claims have declined by 33% since the start of April, further confirmation that a recovery in the labor market is well underway," wrote economists Nancy Vanden Houten and Greg Daco from Oxford Economics, in a report. "We expect more evidence of that recovery in tomorrow's April jobs report and look for an increase in payroll employment of 775,000," the economists said.
See: A million new jobs? That's how many Wall Street thinks the U.S. created in April (https://www.marketwatch.com/story/a-million-new-jobs-thats-how-many-wall-street-thinks-the-u-s-created-in-april-11620322064?mod=mw_latestnews)
In other U.S. economic reports, U.S. productivity rose (https://www.marketwatch.com/story/first-quarter-u-s-productivity-rebounds-at-5-4-rate-11620305410) at 5.4% annual rate in first quarter, while unit labor costs were down at a 0.3% rate over the same period.
Stocks have also been lifted by hope that the Federal Reserve will remain accommodative even as the U.S. and the world attempts to stage a recovery from the worst pandemic in a century.
Atlanta Federal Reserve President Raphael Bostic added to comments (https://www.marketwatch.com/story/feds-bostic-says-too-soon-to-be-tapering-asset-purchases-or-for-fomc-debate-on-issue-2021-05-06?mod=mw_latestnews) by Fed officials this week reinforcing the policy of holding short term interest rates near zero and maintaining the central bank's bond buying program until more progress is made on lowering unemployment and maintaining an inflation rate near 2%.
During a CNBC interview on Wednesday Fed Vice Chairman Richard Clarida said (https://www.marketwatch.com/story/fed-vice-chairman-clarida-says-it-is-not-time-yet-to-talk-about-tapering-2021-05-05)that it is still not time to consider pulling back measures put in place by the central bank that have helped to damp the worst of the economic effects from the deadly pathogen. "We're still a long way from our goals, and in our new framework, we want to see actual progress and not just forecast progress," Clarida said.
Talk of dialing back accommodative monetary policy in the U.S. come as the Bank of England on Thursday (https://www.marketwatch.com/story/pound-gilt-yields-inch-higher-as-bank-of-england-says-it-will-slow-bond-purchase-rate-11620299627) voted 8-1 that the pace of continuing government bond purchases can be "slowed somewhat."
A strengthening economic recovery and effective vaccine rollouts in the U.S. have been the main focus for bullish investors.
"It seems Wall Street feels the economic recovery is indestructible given all the stimulus that is flowing, prospects for more to come, and since it seems Fed Chair Powell has locked himself into a corner of relentless accommodation for the next couple of months," Edward Moya, Senior Market Analyst, The Americas, at OANDA wrote.
But analysts say that investors have struggled to push stocks to further gains, while a fitful rotation has driven investors momentarily out of highflying technology-related stocks and into industrials, banks and energy, which had been the worst performers during the worst of the pandemic but which are expected to perform better as economies reopen.
"There is a growing belief that [first-quarter earnings] may be as good as it gets if margin pressure and the threat of tapering spooks equity punitively," said Arnim Holzer, macro and correlation defense strategist at EAB Investment Group.
Meanwhile, vaccine makers Pfizer(PFE), BioNTech(BNTX) and Moderna(MRNA) were in focus (https://www.marketwatch.com/story/vaccine-makers-lower-after-us-says-it-supports-ip-waivers-2021-05-06), following the announcement (https://www.marketwatch.com/story/u-s-to-back-waivers-for-covid-19-vaccine-patents-11620298832)from U.S. Trade Representative Katherine Tai that the U.S. supports the waiver of intellectual-property protections on COVID-19 vaccines. Shares in
-Mark DeCambre; 415-439-6400; AskNewswires@dowjones.com
Which companies are in focus?
How are other assets faring?
(END) Dow Jones Newswires
May 06, 2021 16:29 ET (20:29 GMT)
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