Nasdaq, S&P 500 Reach New Record Closing Highs Ahead Of Jobs Report

After ending the previous session mostly lower, stocks moved back to the upside during trading on Thursday. With the upward move on the day, the Nasdaq and the S&P 500 reached new record closing highs.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow climbed 271.58 points or 0.8 percent to 35,064.25, the Nasdaq advanced 114.58 points or 0.8 percent to 14,895.12 and the S&P 500 rose 26.44 points or 0.6 percent to 4,429.10.

The strength on Wall Street came following the release of a report from the Labor Department showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended July 31st.

The report said initial jobless claims slipped to 385,000, a decrease of 14,000 from the previous week’s revised level of 399,000.

Economists had expected jobless claims to dip to 384,000 from the 400,000 originally reported for the previous week.

Chris Low, Chief Economist at FHN Financial, said the total number of unemployment recipients fell by 1.5 million between the June and July surveys, suggesting a “hefty” increase in employment in the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect the report to show employment surged up by 870,000 jobs in July after jumping by 850,000 jobs in June. The unemployment rate is expected to dip to 5.7 percent from 5.9 percent.

Meanwhile, a separate report from the Commerce Department showed the U.S. trade deficit widened by more than expected in the month of June, reaching a new record high.

The Commerce Department said the trade deficit widened to $75.7 billion in June from a revised $71.0 billion in May.

Economists had expected the trade deficit to widen to $74.1 billion from the $71.2 billion originally reported for the previous month.

The wider than expected trade deficit came as the value of imports jumped by 2.1 percent to $283.4 billion, while the value of exports rose by 0.6 percent to $207.7 billion.

Sector News

Airline stocks showed a substantial rebound on the day, with the NYSE Arca Airline Index soaring by 4.3 percent following a 2.4 percent nosedive on Wednesday.

Significant strength also emerged among brokerage stocks, driving the NYSE Arca Broker/Dealer Index up by 2.6 percent to its best closing level in well over a month.

Energy stocks also turned in a strong performance, bouncing back along with the price of crude oil. Crude for September delivery advanced $0.94 to $69.09 a barrel after plunging $2.41 to $68.15 a barrel in the previous session.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index and the Philadelphia Oil Service Index climbed by 1.8 percent and 1.7 percent, respectively.

Banking, utilities and computer hardware stocks also saw notable strength on the day, while gold and steel stocks bucked the upward trend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.5 percent, while China’s Shanghai Composite Index dipped by 0.3 percent.

The major European markets also finished the day mixed. While the U.K.’s FTSE 100 Index edged down by 0.1 percent, the German DAX Index rose by 0.3 percent and the French CAC 40 Index climbed by 0.5 percent.

In the bond market, treasuries showed a notable move to the downside on the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, increased by 3.3 basis points to 1.217 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Labor Department’s monthly jobs report, which could have an impact on the outlook for monetary policy.

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