U.S. stocks experienced their strongest trading day since November 2022 on Thursday, driven by a surprise drop in unemployment claims that eased concerns about a potential economic slowdown. The benchmark S&P 500 index surged 2.3%, while the Dow Jones Industrial Average rose 1.8%, and the Nasdaq Composite climbed 2.9%.
Asian markets also saw gains, recovering some of the losses from earlier in the week. The Hang Seng Index in Hong Kong jumped approximately 1.7%, and South Korea’s Kospi increased by more than 1%. In Japan, the Nikkei 225 and Topix indexes remained mostly flat.
This market rebound follows a dramatic decline in Japanese stocks earlier in the week, which marked the worst day for Japanese equities since 1987 and triggered a broader global market sell-off.
Economic Data Provides Market Boost
The unexpected drop in U.S. jobless claims was seen as a positive signal amid recent pessimism. Official figures from the U.S. Labor Department indicated that initial claims for unemployment benefits fell to 233,000 last week, surpassing economists’ expectations.
A report by UBS Global Wealth Management noted that while jobless claims data typically does not drive major market movements, the better-than-anticipated figures suggest that recent market concerns may have been exaggerated.
Ongoing Market Volatility
Despite the recovery, analysts caution that market volatility is likely to persist. Peter McGuire from trading platform XM.com noted that the current market environment presents short-term trading opportunities but anticipates continued fluctuations as the U.S. approaches its election season and awaits the Federal Reserve’s policy decision in September.
The Federal Reserve’s decision last week to hold off on cutting interest rates, unlike other central banks such as the Bank of England, has fueled speculation about future rate cuts. Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, suggested that the Fed might cut rates by up to 50 basis points in September, which could support further market gains.
Overall, while the recent market rally offers a glimmer of recovery, investors remain cautious and watchful for future economic indicators and policy decisions.
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