Markets Rally Wednesday on Encouraging Job Market Reports
Ever mindful of the fact that consumer spending is considered to be the backbone of a country’s economy, on Thursday US markets rallied by more than one percent in response to the substantial drop in unemployment claims, which indicate an improvement in the embattled job market. While other indicators play a role in influencing markets, either positively or negatively, many agree that the job market, as monitored by unemployment claims, continuing claims and other information, tend to have a significant effect on markets, with a drop in jobless claims acting as a booster, and an increase in claims putting the brakes on. This good news about the job market couldn’t have come at a better time , with Black Friday right at the doorstep and retailers set to battle for the lion’s share of consumer dollars.
Following a beating on Tuesday where all three major indexes lost around 1.4 percent, Wednesday saw the Dow Jones industrial average gain 151 points, the Standard & Poor’s 500 climb 18 points, and the Nasdaq increase by 48 points, being 1.4 percent, 1.5 percent and 1.9 percent respectively. Among the biggest gains were Dow components Boeing, United Technologies and American Express, while Amazon and Sandisk made good progress in the tech sector. Due to the Thanksgiving weekend, financial markets will not be open on Thursday and will close at 13h00 on Friday.
Tuesday’s sell off on Wall Street was primarily as a response to the financial dilemma facing Ireland and the outbreak of violence on the Korean peninsula, while concerns regarding Spain and Portugal persist. Add to this the gloomy Federal Reserve forecast that economic recovery would be weak and drawn out over a period of years, and it is no wonder that markets responded negatively. They did, however, stabilize overnight, before improving on Wednesday
Next week will provide some interesting highlights as Wall Street investors ponder Black Friday results from retailers. Black Friday is considered to be the unofficial start of the festive season, and sales on that day are generally a good indication of what can be expected in terms of consumer spending as the season progresses.