By
Steve Muchoki
April 16th, 2024
The declining trend in the jobless claims and under-control inflation data has spurted optimism in the market.
On Thursday, August 12, the US stock indices surged further hitting their record high levels. The Dow Jones Industrial Average surged all the way to 35,500 levels, similarly, the S&P 500 surged 0.30% giving a closing at 4460 levels.
The tech-heavy Nasdaq Composite was an outperformer among the three gaining 0.3% and closing at 14,816.26. The tech and the health sector was an outperformer each gaming 0.6% and 0.8% respectively.
Apple Inc (NASDAQ: AAPL) and Salesforce.com Inc (NYSE: CRM) were the best-performing stocks at the Dow Jones. In a note to clients, Goldman Sachs analyst Chris Hussey wrote:
“Despite the relatively placid surface, there are some more gyrations under the surface of the S&P 500 today. Industrials, Materials, and Energy all led the S&P 500 through the last few sessions, supported in parted by the hopes for increased infrastructure spending, but are now the worst performers today. Conversely, we’re seeing a rotation back into long duration stocks, including Tech, Healthcare, and Comm Services.”
Declining Jobless Claims that Help Dow Jones and S&P 500 to Grow
On Thursday, the Labor Department reported that the jobless claims were on a decline last week. The total jobless claims last week stood at 375,000. This was a clear drop from the 385,000 claims in the previous week.
For the month of July, the consumer prices surged 5.4% from a year earlier. The core inflation was also under control rising 0.3% against the expected 0.4%. Speaking to CNBC, Brad McMillan, chief investment officer at Commonwealth Financial Network said:
“Inflation has, at a minimum, paused. For both the headline and core figures, the monthly and annual numbers were stable or down from last month. Based on that data, inflation is certainly not on an unstoppable increase.”
“The inflation story is more about isolated components, rather than general increases in prices, and even those components are showing signs of peaking. As we dig into the numbers, inflation is above where it has been but is showing signs of rolling over and returning to more comfortable levels,” added he.
The data so far is encouraging for Wall Street investors. However, investors are maintaining caution due to sooner-than-expected policy tightening by the US central bank.
Steelmaker Nucor Corp and equipment maker Caterpillar performed well on Wall Street on Thursday. These gains were due to the optimism surrounding future infrastructure projects.
Theme park and entertainment giant The Walt Disney Company (NYSE: DIS) performed well. The DIS stock gained 0.7% giving a closing at 179.29 levels. However, this stock is trading almost flat on a year-to-date basis.
The US stock market has rallied significantly this year. It will be interesting to see how far the rally persists.