SUPERNEWS

Macro

Jobless Claims at 231K Boost Stocks, Dollar Dips, Gold Up 1%

Unemployment claims at 8-month high of 231,000 fuel rate-cut hopes, driving stocks up and dollar down, while gold rallies.

By Athena Xu

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5/9, 12:58 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Airbnb, Inc.
Equinix, Inc.
NRG Energy, Inc.
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Key Takeaway

  • Surprising rise in jobless claims to 231,000 fuels rate-cut hopes, pushing major indices up; S&P 500 gains 0.1%, Dow rises 0.4%.
  • Dollar weakens as Gold surges by 1%, alongside a notable increase in silver and mixed reactions in the cryptocurrency market.
  • Equinix leads S&P 500 with an 11% jump post earnings, while diverse stock performances reflect earnings impact across sectors.

Unemployment Claims Trigger Market Optimism

The U.S. labor market showed signs of cooling as unemployment claims unexpectedly rose to 231,000 for the week ending May 4, marking the highest level in eight months and surpassing market expectations. This development led to speculation over potential Federal Reserve interest rate cuts, influencing various market sectors. The U.S. Dollar Index (DXY) experienced a notable drop, prompting a surge in gold and silver prices due to the weakened dollar. Additionally, the Bank of England's decision to keep interest rates unchanged while hinting at future cuts further fueled market optimism.

Equity Markets Respond Positively

Wall Street witnessed gains across major indices, with the Dow Jones Industrial Average aiming for its seventh consecutive day of gains, a streak not seen since December 2023. The S&P 500 and the Nasdaq Composite also saw upward movements, albeit modestly. Sector-wise, real estate showed significant strength, with Equinix Inc. leading the S&P 500 performers after surpassing funds from operation results. However, the earnings landscape was mixed, with companies like Airbnb and Duolingo experiencing declines post-earnings announcements, while others like Applovin Corp and NRG Energy Inc. enjoyed gains.

Rate-Sensitive Assets React

The unexpected rise in unemployment claims led to a shift in expectations for Federal Reserve policy, with the market now pricing in a higher likelihood of rate cuts by the end of the year. This anticipation affected rate-sensitive assets, with 2-year Treasury yields moving slightly lower. The bond market's reaction underscores the growing sentiment that the Fed might adopt a more dovish stance in response to emerging weaknesses in the labor market.