Joe McConnell
U.S. stocks posted their best trading day since November 2022, after a surprising drop in jobless claims helped ease concerns about an economic slowdown.
The benchmark S&P 500 index ended the day up 2.3%. The Dow Jones Industrial Average rose 1.8% and the Nasdaq jumped 2.9%.
Stocks in Asia also rose, recovering some of their losses from earlier in the week. In Hong Kong, the Hang Seng Index jumped about 1.7%, while South Korea’s Kospi rose more than 1%. In Japan, shares on the Nikkei 225 and Topix were mostly flat.
This comes after Japanese stocks had their worst day since 1987 earlier in the week, triggering a main route of the global market.
“The latest jobless claims data, while not typically a major market event, supports the view that recent pessimism may have been overdone,” said a report by UBS Global Wealth Management’s chief investment officer.
Official data from the U.S. Department of Labor showed that initial jobless claims in the United States fell more than expected, falling to 233,000 last week.
Despite the apparent recovery In global markets, analysts warn that trading is likely to remain choppy for the time being.
“Market volatility is creating trading opportunities for investors in the short term,” said Peter McGuire of trading platform XM.com.
“It’s going to be a bumpy ride during the election season and we’re all looking forward to the [US Federal Reserve] political decision in September.”
The Federal Reserve postponed last week its interest rate cuts, which usually stimulate growth, unlike other central banks such as the Bank of England.
However, this week’s market turmoil has fueled further speculation about when and by how much the Fed will cut borrowing costs.
“[The] “The Fed is likely to cut rates by up to 50 basis points in September, which in turn will help the valuation expand for the market,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners.
