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03 Sep 2021
2 min read

S&P500, Nasdaq Hit Fresh Records as Strong Economic Data Lifts Stocks

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Key Takeaways

  • Stocks advance on robust labor market data with the S&P500 and the Nasdaq setting new highs
  • US futures remain elevated ahead of the August nonfarm payrolls and unemployment reports

Markets Soar Following Strong Economic Data

The US stock market rose broadly on Thursday as investors parsed the latest economic report which indicated the world’s biggest economy continued to heal from the pandemic.

Weekly jobless claims released on Thursday fell to a new pandemic low as businesses continued to hire workers amid the current rise in Covid-19 infections and hospitalizations. Worker filings for unemployment benefits for the week ended August 28 fell by 14,000 to a seasonally adjusted 340,000, Labor Department data showed.

The level is the lowest since the pandemic swept the financial markets in March 2020. The four-week moving average also registered a slight drop as it fell to 355,000, a new pandemic bottom.

Initial jobless claims have been in a steady decline since mid-July when applications for benefits exceeded 400,000 on a weekly basis. The consistent slide, according to economists, shows labor market conditions continue to improve as the recent Covid-19 wave has not translated into a rise in layoffs.

Investors cheered the positive jobless claims prints and increased their bets on stocks across the board. The Dow Jones Industrial Average added 131.29 points, or 0.37%, to 35,443.82. The S&P500 advanced 12.86 points, or 0.28%, to 4,536.95, a fresh record high for the broad market index.

The Nasdaq Composite continued its record-setting streak for a second day on Thursday. The technology index, having set a record on Wednesday, gained 21.80 points, or 0.14%, to settle at a new all-time high of 15,331.18.

European Markets Trade Moderately

The consistent and seemingly never-ending rise in the valuation of the S&P500 has not allowed the index to see a 5% correction for almost a year. The S&P500 is up more than 20% this year and has almost doubled since the pandemic hit and the wheels fell off the market in March last year. The broader stock gauge yesterday set its 54th record close for the year.

As the latest jobless claims indicated the recovery remained on track, traders and investors now shift their attention to the highly-anticipated nonfarm payrolls and unemployment reports. Strong jobs growth would most likely further tilt the US Federal Reserve to consider tightening monetary policies this year. A weaker economy would complicate the Fed’s tapering framework and the timeline for hiking interest rates.

Economists expect the labor market to have added 720,000 new positions in August. The forecasted number is slightly below July’s figures of 943,000. Thus, unemployment is projected to fall to 5.2%, from 5.4% in July. Both reports are slated for release one hour before the opening bell in New York.

Stock futures are trading modestly higher on Friday as market participants brace for increased volatility before they take off for a long weekend. Indeed, on Monday, the US stock and bond markets will be closed in observance of the Labor Day holiday.

European markets trade moderately to the upside in the early hours of Friday’s session. The Stoxx Europe 600 advanced less than half a percent to levels around 475 points.

The price of bitcoin hovered above $50,000 during the session on Thursday but eased from its intraday highs. Eventually, the coin retreated below the milestone to close the day at $49,500. Early Friday deals have pushed the leading cryptocurrency back near $50,000.

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