Stocks Surge as Jobless Claims Ease Concerns Over US Economy
US stocks opened higher on Thursday after initial jobless claims fell by the most in nearly a year, helping calm worries of a possible recession. The S&P 500 rose about 1%, while those on the tech-heavy Nasdaq jumped more than 1.4%. The Dow Jones Industrial Average was up about 0.4%.
Jobless Claims Data Provides a Boost to Investor Confidence
The latest weekly jobless claims reading gave investors hope that the labor market is in better shape than feared. Weekly initial jobless claims fell more than forecast, coming in at 233,000, down from 250,000 the week prior and below the 240,000 economists had expected. Last week’s sluggish nonfarm payrolls update served as one of the earliest catalysts of the recent declines, but investors took the latest jobless claims data as a sign that the labor market may not be in as bad shape as feared.
Tech Stocks Lead the Charge
Stocks rose after an attempted comeback fell short on Wednesday, when the major averages sank during the session, erasing earlier gains. Investors were closely watching tech stocks, which have led the recent market declines. AI chip heavyweight Nvidia opened higher after losing more than 5% on Wednesday. The S&P 500 Tech ETF, along with Industrials and Healthcare, were the leading sectors in early trading.
Mortgage Rates Fall to Lowest Level in Over a Year
The decline in mortgage rates has also been a positive development for prospective homebuyers facing affordability issues. The average rate on the 30-year fixed-rate mortgage dropped to 6.47% from 6.73% last week, according to Freddie Mac. The drop in rates has increased prospective homebuyers’ purchasing power and should begin to pique their interest in making a move. Goldman Sachs expects home prices to rise 4.5% this year and 4.4% next, up from a prior forecast of 4.2% this year and 3.2% next year.
Earnings and Economic News
In other news, Eli Lilly shares surged around 8% after posting better-than-expected earnings and raising its full-year outlook on strong demand for diabetes treatment Mounjaro and obesity drug Zepbound. The momentum names that suffered the most on Monday bounced back on Thursday. Chipmakers Nvidia and Broadcom jumped 4% and 5.2%, respectively, while Meta Platforms climbed around 3%, and Apple ticked up 1.5%.
Outlook and Next Steps
The latest weekly jobless claims data and the surge in Eli Lilly shares helped boost investor confidence in the US economy, leading to a surge in stocks on Thursday. However, the housing market remains a concern, with buyers still on the sidelines despite lower mortgage rates. The Federal Reserve’s decision on interest rates in September will be closely watched, as it could have a significant impact on the housing market and the broader economy.
