Jittery Stocks Turned Lower After Jobless Claims Dropped to 7-month Low

Barry Adams
07 Sep, 2023
New York City

Resurgent inflation worries dominated market sentiment after the latest data pointed to a resilient U.S. economy and the labor market. 

Tech heavy Nasdaq Composite index dropped more than 1% on the worries that the Fed may  raise rates at the next policy meeting and higher rates are likely to stay longer.

Initial jobless claims declined 13,000 from the previous week to 216,000 at the end of September 2, the U.S. Department of Labor reported in its weekly report on Thursday. 

The jobless claims dropped near a 7-month low, and continuing claims fell 40,000 to 1.679 million in the previous week, and fell to a six-month low. 

What is good news for the job market is bad news for investors, because investors interpreted the strength in the job market could spur the Federal Reserve to consider raising rates at its next meeting. 

A separate report from the U.S. Bureau of Labor Statistics revised higher its estimate of the unit labor costs. 

Unit labor costs in the nonfarm business sector rose 2.2% from a year ago in the second quarter, higher than 1.6% in the preliminary estimate. 

The increase was still lower than 3.3% gain in the first quarter.  

The unit costs increase reflects a 5.7% rise in hourly compensation compared to a 5.5% rise and a 3.5% increase in productivity compared to a 3.7% increase in the preliminary estimate respectively. 

Unit labor costs in the manufacturing sector increased 4.9% compared to 3.6% and for business rose 1.9% compared to 1.3% in the previous estimate respectively. 

The dollar index, which tracks the price of the U.S. dollar against major currencies, increased for the fifth day in a row and extended weekly gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates. 

The dollar index jumped above 105 mark and extended gains from the low of 99.85 reached on July 13. 

 

U.S. Indexes & Yields 

The S&P 500 index traded down 0.6% to 4,438.03 and the Nasdaq Composite fell 1.3% to 13,697.33. 

The yield on 2-year Treasury notes increased to 5.03%, 10-year Treasury notes inched higher to 4.29% and 30-year Treasury bonds edged down to 4.36%. 

Crude oil increased $0.45 to $86.27 a barrel and natural gas prices decreased 5 cents to $2.53 a thermal unit. 

The dollar index, which tracks the price of the U.S. dollar against major currencies, increased for the fifth day in a row and extended weekly gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates. 

The dollar index jumped above 105 mark and extended gains from the low of 99.85 reached on July 13. 

 

U.S. Stock Movers 

Dutch Bros Inc declined 6.9% to $26.12 after the company announced its plan to raise $300 million through the public offering of Class A common stock. 

WestRock Company increased 5.8% to $26.12 on a report that the company is nearing a merger with the UK-based paper and packaging company Smurfit Kappa. 

The expected merger news was reported by The Wall Street Journal.  

ChargePoint Holdings Inc plunged 27.5% to $5.08 after the company reported second quarter revenue jumped 39% to $150.5 million from $108.3 million and gross margin plunged to 1% from 17% a year ago. 

Net loss in the quarter increased to $125.3 million from $92.7 million and diluted loss per share rose to 35 cents from 28 cents a year ago. 

Dave & Buster's Inc dropped 3.9% to $36.0 after the restaurant and entertainment company reported quarterly results that missed some investors expectations. 

Second quarter revenue increased 15.7% to $542.1 million and net income declined to $25.9 million from $29.1 million and diluted earnings per share was 60 cents compared to 59 cents a year ago.