Stocks rose for a fifth straight day Thursday, led again by tech, as the Labor Department’s latest report showed that new jobs claims were down by 249,000 from the previous week after rising for two straight weeks.
Initial jobless claims for the week ending Aug. 1 totaled 1.186 million, adding up to the lowest level of jobless claims since the COVID pandemic began in earnest.
Markets reacted positively to the news as Wall Street had been expecting more than 1.4 million law-offs.
Dow futures pared its earlier losses, closing up 185 points.
And the S&P 500 saw it’s fifth-straight day of gains, with Apple Inc. in the lead.
But the good news could be overshadowed by the fact that nearly 1.2 million laid-off Americans applied for state unemployment benefits last week, evidence that a lot of lay-offs are becoming permanent at the same time as a critical $600 weekly federal jobless payment has expired.
Furthermore, an additional 656,000 people applied for new unemployment benefits last week, according to the department’s report.
Lower number of jobless claims suggest some improvement in the labor market despite another surge in coronavirus cases in many U.S. states.
A new survey from Cornell University shows that one-third of furloughed workers had been laid off a second time, with another 26% that have returned to work have been told by employers they might lose their jobs again.
According to the Labor’s Department report, the highest jobless claims occurred in California, Florida, Texas, Georgia — states that have experienced new outbreaks of coronavirus, following summer vacations. Some Sunbelt states decided to reimpose restrictions and companies were forced to lay off or furlough workers.
As of late July, daily new cases have declined in those states, but increased experts are warning that COVID-19 cases are now on the rise in the Midwest, mostly due the fact that vacations are ending and vacationers are coming home and bringing the virus with them.
Several states, including, Washington and Michigan have imposed new restrictions on dining in response to increased cases, which may result in fresh layoffs.
Last month, medical experts called for a restart of the COVID lockdown, and postponing reopening business and schools, as the United States adds tens of thousands of new cases daily. Related: Singapore's $3 Billion Oil Trading Scandal
The report comes a day ahead of the Labor Department’s nonfarm payrolls release for July, which economists expected to show growth of between 1.26 and 1.5 million.
But it’s not just the jobs report that the market is responding positively to. It’s banking on a new stimulus deal more than anything.
Even though wrangling over the new stimulus bill continues.
The White House has suggested that Congress has until Friday to cut a deal for a stimulus package — or get nothing. US President Donald Trump has already announced he is weighing executive action in the case of the failed negotiations.
By Josh Owens for Safehaven.com
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