U.S. weekly jobless claims fell, signaling resilience in the labor market despite recent economic concerns, boosting investor confidence.
The number of Americans filing for unemployment benefits fell last week, delivering a hopeful sign that the labor market is holding up despite a recent spate of data suggesting it may be cracking.
Initial jobless claims, which are a high-frequency data point seen as a proxy for unemployment, fell by 17,000 to 233,000 for the week that ended on Aug. 3, according to data released on Aug. 8 by the Department of Labor.
The reading was lower than the 240,000 market analysts expected and sent Wall Street stock futures higher. Futures on the S&P 500 rose 0.7 percent as of 8:30 a.m. New York time, those on the Nasdaq jumped 0.9 percent, and Dow Jones Industrial Average futures advanced 0.4 percent.
Yields on the benchmark 10-year U.S. Treasury, jumped higher on the news, suggesting investors were seeing the unemployment numbers in a positive light.
“We are officially back to a good news is good news market,” Spencer Hakimian, founder of Tolou Capital Management, said in a post on X.
Economist Mohamed El-Erian, the former CEO of U.S. investment management firm Pimco, called the numbers a “relief after last week’s unemployment and growth scare.”
Hopes that the U.S. economy will bear the long bout of high interest rates without sinking into a recession were dealt a sharp blow last Friday when job creation numbers came in well below expectations and the unemployment rate jumped higher than anticipated. That followed the release of data showing unemployment filings rising to an 11-month high, U.S. manufacturing sinking deeper into contraction, and hiring plans among U.S. firms at their lowest level since 2012.
Markets reacted to Friday’s lackluster job creation data with a selloff in stocks and other risky assets, which continued on Monday, when a measure of trading volatility—dubbed the Wall Street “fear gauge”—soared to its third-highest level in history.
Still, aside from some week-to-week fluctuations, jobless claims have generally been drifting higher since the beginning of the year and, along with them, so has investor anxiety that the labor market is about to take nose dive and a recession is imminent.
By Tom Ozimek
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