Wall St climbs as jobless claims rise, payrolls data in focus

By Amruta Khandekar and Shristi Achar A

(Reuters) – Wall Street‘s main indexes rose on Thursday after a jump in weekly jobless claims eased some concerns about sharper rate hikes as investors geared up for a key jobs report that could determine the Fed’s future monetary policy path.

The jobless claims report comes on the heels of a string of recent data that had indicated a tight labor market which, along with hawkish remarks by Federal Reserve Chair Jerome Powell, had exacerbated concerns that the central bank could shift to more aggressive rate hikes.

Traders reduced bets of a 50-basis-point rate hike at the Feds next meeting after the report, with the terminal rate now seen at 5.63% in September compared with 5.67% prior to the report..

They had dramatically increased their bets for a large 50 basis point rate increase by the Fed in March from a 25 bps hike, after Powells testimony.

Powell, on the second day of his testimony on Wednesday, reaffirmed his message of likely sharper interest rate hikes, but emphasized that the decision hinged on economic data before the central banks March meeting.

Initial claims for state unemployment benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4, the Labor Department said on Thursday. Economists polled by Reuters had forecast 195,000 claims for the latest week.

“This could be a game changer for todays market,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“Its certainly good news in terms of higher interest rate expectations. If this trend continues, the Fed might not have to be that aggressive.”

As U.S. Treasury yields eased following the data, shares of Big Tech and growth companies such as Amazon.com Inc, Apple Inc, Microsoft, Alphabet Inc rose between 0.8% and 1.3%.

The gains pushed up the S&P 500 communication services, consumer discretionary and information technology sectors between 0.4% and 0.6%.

Energy shares were the biggest gainers, up 1.7% as oil prices climbed.

Investors‘ focus is now on the February non-farm payrolls report on Friday, which is expected to show payrolls rose by 205,000 last month, according to economists polled by Reuters, after January’s blowout 517,000 figure, which had first led markets to reprice their expectations for U.S. interest rates.

At 9:45 a.m. ET, the Dow Jones Industrial Average was up 143.02 points, or 0.44%, at 32,941.42, the S&P 500 was up 16.78 points, or 0.42%, at 4,008.79, and the Nasdaq Composite was up 48.42 points, or 0.42%, at 11,624.43.

Weighing on the S&P 500, shares of SVB Financial Group slumped 34.8% as the startup-focused lender slashed its 2023 outlook and announced a $1.75 billion share sale to shore up its balance sheet.

U.S.-listed shares of JD.com Inc dropped 7.9% after the Chinese e-commerce firm missed fourth-quarter revenue estimates.

General Electric Co rose 6.9% as the industrial conglomerate reiterated its 2023 earnings forecast.

Advancing issues outnumbered decliners by a 1.64-to-1 ratio on the NYSE and by a 1.06-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and 11 new lows, while the Nasdaq recorded 28 new highs and 54 new lows.

(Reporting by Amruta Khandekar, Shristi Achar A and Johann M Cherian in Bengaluru, additional reporting by Medha Singh; Editing by Vinay Dwivedi)