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The weekly jobless claims as per the Labor Department report have dropped to a four-month low since November 2020. The tech and growth stocks continue to rally further with the stimulus boost.
A day after Dow Jones touched its all-time high on Wednesday, the US stock market continued to stay upbeat on Thursday. Yesterday, the S&P 500 (INDEXSP: .INX) touched a record high of 1% and ending the trading session at 3,939.34 levels. The Dow Jones Industrial Average (INDEXDJX: .DJI) also surged 188 points or 0.58% ending at 32,485 levels. Meanwhile, the number of jobless claims is decreasing.
On the other hand, the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) registered strong 2.5% gains. Giants like Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL) and Facebook Inc (NASDAQ: FB) clocked 3% gains while Tesla shot 4.7% on Thursday.
The market rally continued amid President Joe Biden signed the $1.9-trillion stimulus as a COVID-19 relief package on Thursday afternoon. This plan involves sending $1400 to most Americans while forwarding $350 billion for local, state and tribal relief. Also, $20 billion will go towards COVID-19 vaccinations. As per the White House announcements, the stimulus checks should appear in the bank accounts by this week.
Scott Ladner, chief investment officer at Horizon Investments, told CNBC:
“The stimulus is beating the virus at least as far as the market is concerned. And real rates being near negative is just historically a very strong tailwind for asset prices. That can get ignored on a day-to-day basis especially when people become concerned that inflation is going to rear its head, but at the end of the day, inflation is just coming back to normal.”
The beaten-down tech and growth stocks are now rebounding once again with the drop in the US Treasury Yields. Stock in the chipmaking and the semiconductor space jumped sharply on Thursday. China’s semiconductor trade association formed a new group to work with their US counterparts and further ease trade tensions between the two nations. AMD Inc (NASDAQ: AMD) and Nvidia Corporation (NASDAQ: NVDA) both surged 4% each on Thursday.
US Weekly Jobless Claims on a Decline
In an interesting development, the number of Americans filing for jobless claims dropped to a four-month-low. As per the Labor Department report, the first time filings for unemployment insurance for the week ending March 6 was 712,000. This was a positive indicator as it was below the Dow Jones estimate of 725,000.
Mike Loewengart, managing director of investment strategy at E-Trade Financial told CNBC:
“The drop in jobless claims is another win for the week, and a solid sign that we’re making some strides toward pre-pandemic life. There’s a pretty optimistic picture being painted despite some of the inflation-related market jitters we’ve seen over the past few weeks.”
The economic reponing topped with fiscal stimulus has also added fuel to the cyclical stocks from the energy sector.