Stocks Jump as Tech Leads After Jobless Claims Recover Further

21 May 2021 · 3rd Party Analysis

Stocks Jump as Tech Leads After Jobless Claims Recover Further


In Summary

  • Stocks end three-day losing streak on Thursday, Friday futures mildly positive
  • New pandemic low in jobless claims signals economic recovery remains strong

Stocks Jump as Tech Leads After Jobless Claims Recover Further

US equities rebounded Thursday after weekly jobless claims extended their decline to a new pandemic low. As a result of the positive economic data showing recovery remains on track, major indexes snapped a three-day losing streak. The number of workers seeking or receiving unemployment benefits for the week ended May 15 fell to 444,000, a decrease of 34,000 from the previous week’s revised level. The improvement in the seasonally adjusted initial claims brought the latest figures to their lowest level since March 14, 2020, when the number was 256,000.

The encouraging data of a reopening economy translated to gains for technology shares, rather than sectors positioned to benefit from a renewed economic activity. Stocks were largely under pressure this week due to rising inflation concerns which could prompt the US Federal Reserve to unwind some of the monetary policy that keeps buoying the stock market.

The three major stock benchmarks ended the day in green territory with the Nasdaq Composite in the lead. The tech-oriented stock gauge pushed higher by 1.77%, or 236.00 points, to end the session at 13,535.74. The S&P500 posted a gain of 1.06%, or 43.44 points, to 4,159.12. The Dow Jones Industrial Average advanced moderately by 0.55%, or 188.11 points, finishing Thursday’s trading at 34,084.15.

A Rise for Bitcoin

Thursday’s gains look to flow into Friday’s opening levels as futures contracts tied to the indexes are showing a continuation of the upside momentum. All three indexes are higher by about 0.10% in pre-market trading today.

The S&P500 and the Dow Jones are now floating about 2% off their all-time highs set roughly two weeks ago. The Nasdaq Composite is down 4.3% from its peak in April.

Meanwhile, the cryptocurrency market remains pressured on Friday as market participants are still fearful whether to bet on the digital assets after Wednesday’s turmoil. Bitcoin rose 5% in early Friday to a session high of $42,200 but later erased the gains and the price retreated 0.5% below the opening levels around $40,000.

As the risk-on risk-off approach to the crypto market continues, the Federal Reserve and the Department of Treasury are taking steps toward the fledgling marketplace. Federal Reserve Chairman Jerome Powell appeared in a short video where he announced the central bank is exploring the idea of creating a digital dollar to maintain the dollar’s important role globally.

The Fed is now in the process of working on a discussion paper that would focus on whether the central bank needs to issue a central bank digital currency (CBDC). “The paper represents the beginning of what will be a thoughtful and deliberative process,” Chairman Powell said.

In addition, cryptocurrencies are in focus for the Treasury Department. Yesterday, the US Treasury published a note which announced businesses who transfer over $10,000 in cryptocurrency should report to the Internal Revenue Service (IRS). The paper mentions that cryptocurrencies pose a “significant detection problem” and are used to evade taxes. The initiative is part of a larger effort to crack down on tax evasion practices.

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