US stocks snapped higher on Thursday as unemployment data eased recession concerns, while European and Asian equities struggled.
First-time claims for unemployment benefits dropped last week by more than expected to 233,000, according to Labor Department data.
“The key takeaway from the report is that the downturn in initial jobless claims — a leading indicator — is helping to quell recession concerns,” said Briefing.com analyst Patrick O’Hare.
Data last Friday showing fewer US jobs created in July than expected triggered concern that the Federal Reserve had waited too long to begin cutting interest rates and the US economy could end up sliding into recession.
“Any data which suggests that the Fed isn’t behind the curve in regards to its likely rate-cut in September is welcomed news for investors,” said eToro US investment analyst Bret Kenwell.
US recession fears, combined with a spike in the value of the yen following a rate hike last week, sent global equity markets plunging Monday.
Since then there have been rebounds and renewed losses as traders seek to weigh up the risks of recession in the United States, the world’s biggest economy.
In Europe, London and Paris were lower but Frankfurt was flat in afternoon deals Thursday, after Tokyo closed down 0.7 percent.
The Japanese index had tumbled more than 12 percent Monday before rocketing over 10 percent Tuesday, largely because of wild swings in the yen against the dollar.
Investors are also closely tracking corporate earnings.
Warner Bros. Discovery’s share price plunged nine percent at the start of trading Thursday after it reported a quarterly loss of almost $10 billion.
Almost all of the loss was down to a $9.1 billion write-down in the value of the US media giant’s cable network, it announced in a statement, underscoring the challenges facing the legacy television industry.
Weak earnings from Disney, Airbnb and TripAdvisor added to the sense of concern that American consumers were tightening their belts as the impact of elevated inflation and two-decade-high borrowing costs bite.
Federal Reserve boss Jerome Powell last week indicated that the US central bank could cut interest rates at its September meeting, with 25 basis points seen as the likely move.
But traders are now eyeing as many as 50 points, with another 50 possibly before the end of the year, following last weeks jobs data.
The prospect of several reductions has been offset by profit-taking in the tech sector, whose valuation has soared this year on a rush for all things related to artificial intelligence.
In foreign exchange Thursday, the yen rose against the dollar after tumbling Wednesday in reaction to a dovish signal from the Bank of Japan that its recent rate-hikes would not be repeated while markets remained volatile.
– Key figures around 1330 GMT –
New York – Dow: UP 0.6 percent at 38,981.67 points
New York – S&P 500: UP 1.0 percent at 5,252.20
New York – Nasdaq Composite: UP 1.3 percent at 16,398.55
London – FTSE 100: DOWN 0.6 percent at 8,117.05
Paris – CAC 40: DOWN 0.3 percent at 7,240.97
Frankfurt – DAX: FLAT at 17,612.84
Euro STOXX 50: DOWN 0.2 percent at 4,660.15
Tokyo – Nikkei 225: DOWN 0.7 percent at 34,831.15 (close)
Hong Kong – Hang Seng Index: UP 0.1 percent at 16,891.83 (close)
Shanghai – Composite: FLAT at 2,869.90 (close)
Dollar/yen: DOWN at 146.06 yen from 146.83 yen on Wednesday
Euro/dollar: UP at $1.0928 from $1.0925
Pound/dollar: DOWN at $1.2690 from $1.2692
Euro/pound: UP at 86.11 pence from 86.06 pence
West Texas Intermediate: DOWN 0.1 percent at $75.17 per barrel
Brent North Sea Crude: DOWN 0.1 percent at $78.30 per barrel
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