New York Stock Market Rises as Employment Slowdown Concerns Ease... Nasdaq Up 1.56%

Last Week's Unemployment Claims Down by 17,000 from Previous Week
Largest Decrease in a Year
"Economic, Geopolitical, and Presidential Election Uncertainties... Increased Volatility"
Remarks Scheduled by Richmond Fed President Barkin

The three major indices of the U.S. New York Stock Exchange are showing gains in early trading on the 8th (local time). This follows last week's report of the largest decrease in new unemployment claims in a year, easing some concerns about a cooling labor market. Investors are awaiting remarks from Federal Reserve (Fed) officials scheduled for later in the afternoon.

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As of 10:13 a.m. in the New York stock market, the Dow Jones Industrial Average, which focuses on blue-chip stocks, is up 1.28% from the previous trading day, standing at 39,258.67. The S&P 500, centered on large-cap stocks, has risen 1.45% to 5,275.04, and the tech-heavy Nasdaq Composite is trading 1.56% higher at 16,448.15.

According to the U.S. Department of Labor, new unemployment claims for the week of July 28 to August 3 totaled 233,000. This figure was below both the expert forecast of 241,000 and the revised figure of 250,000 from the previous week. Notably, new claims decreased by 17,000 compared to the prior week, marking the largest drop in a year. This has partially alleviated concerns about a rapidly cooling labor market that had spread following the July employment report released on August 2.

However, continuing claims for unemployment benefits, which count those claiming benefits for at least two weeks, stood at 1,875,000 for the week of July 21 to 27. This exceeded both the market expectation of 1,870,000 and the revised figure of 1,869,000 from the previous week.

Karl B. Weinberg, Chief Economist at High Frequency Economics, said, "The data signals that we need to watch for a real weakening in the labor market ahead," adding, "This will impact Fed policy." He further assessed, "That signal from the labor market indicates a moderate slowdown rather than a recession."

U.S. Treasury yields are also rising amid easing concerns about a cooling labor market. The 10-year U.S. Treasury yield, a global benchmark for bond yields, increased by 3 basis points (1 bp = 0.01 percentage points) to 3.99%, while the 2-year Treasury yield, sensitive to monetary policy, rose 6 basis points to 4.06%.

On the other hand, some speculate that the labor market slowdown will accelerate, leading to a rise in the unemployment rate.

Eliza Winker, an economist at Bloomberg Economics (BE), Bloomberg's economic research arm, said, "I believe layoffs are increasing as the economy softens," and added, "Our baseline forecast is that the unemployment rate will rise to 4.5% by October." The unemployment rate increased from 4.1% in June to 4.3% in July.

Experts expect market volatility to persist for some time. Concerns about a recession have not been fully dispelled, and the risk of unwinding the yen carry trade remains a source of market instability. The ongoing debate over an artificial intelligence (AI) rally bubble also contributes to a fragile market sentiment. The New York stock market, which rose early in the previous day, reversed to a decline and closed lower after weak demand was seen in the U.S. Treasury's 10-year bond auction.

Joseph Ferrara, an investment strategist at Gateway Investment Advisors, said, "The recent market volatility shocks may be a preview of the rest of the year," and forecasted, "Concerns about the economy, geopolitical conflicts, and the upcoming November election could keep investors on edge for the next few months." He emphasized, "Investors should prepare their portfolios for increased volatility from now through the end of the year."

Investors are awaiting remarks from Thomas Barkin, President of the Richmond Federal Reserve Bank, scheduled for later in the afternoon. Amid concerns about slowing employment, voices calling for an emergency rate cut or a 0.5 percentage point 'big cut' in September are growing louder, making the Fed official's comments highly anticipated.

By individual stocks, Nvidia is up 1.88%. Meta, Facebook's parent company, and Alphabet, Google's parent company, are rising 2.43% and 2.04%, respectively. Microsoft (MS) is also up 1.24%. Pharmaceutical company Eli Lilly surged 9.2% after reporting quarterly earnings that exceeded expectations and raising its annual outlook. Warner Bros. Discovery and Bumble plunged 11.28% and 37.59%, respectively, following disappointing earnings reports.

International oil prices are steady. West Texas Intermediate (WTI) crude oil is trading at $75.33 per barrel, up $0.10 (0.1%) from the previous day, while Brent crude, the global benchmark, is down $0.40 to $78.29 per barrel. Concerns about supply reductions due to Middle East instability and demand decreases are mixed, resulting in little movement.