The stock market opened slightly higher on Thursday, after another 1 million Americans filed for weekly unemployment and investors turned their attention to a big speech about inflation from Federal Reserve chairman Jerome Powell.
The Dow Jones Industrial Average was up 0.6%, over 150 points, on Thursday, while the S&P 500 rose 0.2% and the tech-heavy Nasdaq Composite lost 0.1%.
Jobless claims came in above 1 million for the second week in a row, which was in line with Wall Street expectations, according to new data from the Labor Department.
Investors are closely watching comments from Fed chair Powell, who on Thursday announced a “robust updating” of policy in which the Federal Reserve will allow inflation to run “moderately” above its long-running 2% goal.
The central bank’s new approach to inflation is meant to support the labor market and broader economy by keeping interest rates lower for a longer period of time.
Shares of big tech stocks such as Amazon, Microsoft and Apple all rose following Powell’s speech.
U.S. GDP for the second quarter, meanwhile, was revised down to show a slightly lower decline than first expected: The second reading shows a decline of 31.7%, compared to an initial reading last month of 32.9%.
CRUCIAL QUOTE
“Albeit slow, the number of initial jobless claims continues to trend lower,” says Charlie Ripley, senior investment strategist for Allianz Investment Management. “While any improvement is a positive sign, the pace of declining claims will likely remain a concern for the Fed who has continuously portrayed a gloomy outlook for the U.S. economy.” He adds that while the Fed has “done what it can to support the recovery,” it’s likely that Chairman Powell “reiterates the need for additional fiscal stimulus” from Congress during his speech today.
KEY BACKGROUND
Stocks have continued to hit new record highs in recent weeks, led by a rally in high-flying tech stocks. The S&P 500 rose 1% on Wednesday to hit a new record close of 3,478, while the Nasdaq jumped 1.7% and also hit a new high. Wednesday’s gains put the S&P up 58% from its coronavirus pandemic low point on March 23, while the Nasdaq has soared 75% over that period.
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