(Bloomberg) — Stocks staged a solid rebound and bonds fell after the latest US labor-market reading helped ease fears about a more pronounced slowdown in the world’s largest economy.
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All major groups in the S&P 500 advanced, with the gauge set for its biggest gain since February as data showed US initial jobless claims tumbled the most in nearly a year. As economic angst subsided, Treasuries dropped across the curve — with the selloff driven by shorter maturities. Swap traders further trimmed bets on aggressive Federal Reserve easing in 2024.
Markets have been on a tailspin since last week’s economic data spurred concerns the Fed is waiting too long to cut rates from a two-decade high, jeopardizing prospects for a soft landing. Those jitters combined with stretched positioning, underwhelming tech earnings and poor seasonal trends were among the factors spurring massive volatility around the globe.
To Ian Lyngen at BMO Capital Markets, Thursday’s data was interpreted as evidence the labor market remains solid.
“Some good news with jobless claims coming in less than expected,” said Chris Zaccarelli at Independent Advisor Alliance. “It’s hard to believe a recession has already begun. We are exercising caution, but think that the panic that started earlier in the month was overblown.”
The S&P 500 rose about 2%. The tech-heavy Nasdaq 100 climbed 2.4%. The Russell 2000 of smaller firms added 1.8%. Nvidia Corp. led gains in tech megacaps. Eli Lilly & Co. soared on a bullish outlook.
Treasury 10-year yields advanced five basis points to 4%. The dollar was little changed.
Initial claims decreased by 17,000 to 233,000 in the week ended Aug. 3, according to Labor Department data released Thursday.
“I see these claims as some kind of respite in contrast to the stress which hit markets last week with the US job data,” said Alexandre Baradez at IG. “That being said, I thing the upward trend on US unemployment intact. This still opens the door to a Fed rate cut in September.”
Any data which suggests that the Fed isn’t behind the…
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