Jobless Claims Fall More Than Expected, But Investors Still Expect Fed Hike Next Week

The number of Americans applying for unemployment benefits was lower than anticipated last week, again demonstrating the strength and resilience of the U.S. labor market.

The Department of Labor reported 228,000 unemployment filings for the week ending July 15, a decrease from the previous week’s figure of 237,000, and below the 242,000 economists had predicted.

The latest initial unemployment claim figures are also below the three-month moving average of 244,580. Despite a still-resilient labor market, investors largely expect the Federal Reserve to conclude its tightening cycle after hiking for the last time next week.

The likelihood of a further rate hike in September is priced at 14%, and for November, a 30% chance, according to the latest CME Group Fedwatch data.

Key Highlights From Last Week’s Jobless Claims

• The number of Americans registering for jobless claims in the week ending July 15 fell from 237,000 to 228,000, below the expected 242,000.
  
• The four-week moving average for jobless claims, which eliminates week-to-week variability, fell from 246,750 to 237,500.
  
• Continuing jobless claims for the week ended July 8 rose from the downwardly revised 1,721,000 to 1,754,000, above the expected 1,729,000.
  
• Notable weekly increases were reported in California, up 5,059 to 50,221, and Georgia, up 4,616 to 10,227.

Market Reactions: Stocks Under Pressure, Dollar Gains

Futures on the S&P 500 Index and the Nasdaq 100 Index were in the red Thursday as disappointing earnings reports from Tesla Inc. (NASDAQ:TSLA) and Netflix Inc. (NASDAQ:NFLX) dampened risk sentiment.

Treasury yields rose, with the 10-year yield gaining 6 basis points to 3.81%, and the dollar gained ground against peers. The U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), was 0.2% higher.

Gold, as tracked by the SPDR Gold Trust (NYSE:GLD), ticked 0.1% lower to $1,976/oz. 

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