U.S. Stocks Close Modestly Higher Ahead Of Monthly Jobs Data

After seeing early strength, stocks gave back ground in afternoon trading on Thursday but still managed to end the session modestly higher. With the uptick on the day, the Nasdaq and the S&P 500 finished the day at new record closing highs.

The major averages all closed in positive territory. The Dow climbed 131.29 points or 0.4 percent to 35,443.82, the Nasdaq inched up 21.80 points or 0.1 percent to 15,331.18 and the S&P 500 rose 12.86 points or 0.3 percent to 4,536.95.

The modest strength on Wall Street came following the release of a Labor Department report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended August 28th.

The report said initial jobless claims dipped to 340,000, a decrease of 14,000 from the previous week’s revised level of 354,000.

Economists had expected initial jobless claims to edge down to 345,000 from the 353,000 originally reported for the previous week.

With the modest decrease, jobless claims fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

The weekly jobless claims data came a day ahead of the release of the Labor Department’s more closely watched monthly jobs report.

Trading activity remained somewhat subdued ahead of the release of the monthly jobs report, which could impact the outlook for monetary policy.

Fed officials have indicated inflation has reached their target but they need to see further improvement in the labor market before they begin tapering asset purchases and raising interest rates.

Economists currently expect employment to jump by 750,000 jobs in August after surging by 943,000 jobs in July. The unemployment rate is expected to dip to 5.2 percent from 5.4 percent.

In other U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit narrowed in the month of July.

The Commerce Department said the trade deficit narrowed to $70.1 billion in July from a revised $73.2 billion in June.

Economists had expected the trade deficit to narrow to $71.0 billion from the $75.7 billion originally reported for the previous month.

The narrower trade deficit came as the value of exports jumped by 1.3 percent to $212.8 billion, while the value of imports dipped by 0.2 percent to $282.9 billion.

Sector News

Energy stocks saw substantial strength on the day, moving sharply higher along with the price of crude oil. Crude for October delivery shot up $1.40 to $69.99 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index spiked by 2.8 percent, while the NYSE Arca Natural Gas Index and the NYSE Arca Oil Index surged up by 2.7 percent and 2.5 percent, respectively.

Considerable strength was also visible among tobacco stocks, as reflected by the 2.5 percent jump by the NYSE Arca Tobacco Index. The index ended the session at its best closing level in almost two years.

Networking, transportation and telecom stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.3 percent, while South Korea’s Kospi slumped by 1 percent.

Meanwhile, the major European markets moved modestly higher on the day. While the U.K.’s FTSE 100 Index climbed by 0.3 percent, the German DAX Index and the French CAC 40 Index both inched up by 0.1 percent.

In the bond market, treasuries extended the lackluster performance seen in the previous session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.294 percent.

Looking Ahead

The monthly jobs report is likely to be in the spotlight on Friday, overshadowing a separate report on activity in the service sector.

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