Rate Hike Relief? How Latest Jobless Claim Numbers Could Turn Economic Tide
The stock market closed strong on Thursday, with the Nasdaq Composite jumping 2.6% in the wake of Wednesday’s broad sell-off. But the good day on Wall Street could be due to a somewhat bad time for something else: employment.
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First-time unemployment filings increased last week, totaling 225,00 for the week ending December 24, data from the Department of Labor showed. That represents a spike of 9,000 from the week prior.
The number of Americans now receiving unemployment benefits has reached the highest level since February – a possible sign that the Federal Reserve’s interest-rate hikes might be tempering inflation, which has long been the goal. This cooling labor market appears to be leading to a resurgence in faith among investors that the plan is working and inflation is finally being tamed.
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Stocks plummeted earlier this month after the November jobs report revealed a robust labor market. This is because higher employment rates means, ostensibly, higher wages which means more inflation, which means a higher likelihood of a recession. And nothing spooks investors more than the word “recession” – even though we’ve all been told time and again (and have the firsthand experience to know it) that we’ve just got to ride the economic downturns out and we’ll bounce back just fine.
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