Wall Street stocks traded cautiously on Thursday, ending their rally from the previous session, as fresh weak US economic data brought back concerns over the pace of US inflation.
Wall Street’s benchmark S&P 500 was up 0.1 per cent in the first hour of trade while the tech-heavy Nasdaq Composite added 0.4 per cent.
The gains were muted after data from the US labour department showed that applications for new unemployment aid fell to 242,000 claims last week, from 264,000 in the previous seven days.
The figure landed below analyst expectations, raising concerns that a tight labour market will make it harder for the Federal Reserve to bring inflation levels back to target.
At the same time, corporate results have painted a mixed picture of consumer spending. Walmart shares rose 2.3 per cent after the world’s largest retailer delivered stronger than expected earnings and raised its full-year forecasts for sales growth.
The company was the outlier among rivals Home Depot and Target, which painted a much bleaker image of US discretionary spending earlier in the week.
The KBW regional banking index lost 0.3 per cent on Thursday, ending its rally from the previous session when lender Western Alliance reported earlier in the week that its deposits grew by $2bn in the second quarter.
The yield on interest rate-sensitive two-year Treasury notes was up 0.07 percentage points at 4.22 per cent. The yield on the benchmark 10-year note was up 0.06 percentage points at 3.64 per cent. Bond yields rise when prices fall.
The dollar index, which tracks the currency against a basket of six peers, gained 0.5 per cent.
“The dollar’s strength [ . . . ] signals how the FX markets seem to be lagging the cautious optimism shown in other asset classes like equities,” said Francesco Pesole, currency strategist at ING.
International oil benchmark Brent crude fell 0.8 per cent to $76.34 a barrel, while US equivalent West Texas Intermediate was down 0.6 per cent to $72.32 a barrel.
A day earlier, Wall Street stocks jumped at the announcement that the US Democrats and Republicans were approaching a budget agreement that would avoid a default on US debt.
In Europe, the region-wide Stoxx 600 was up 0.2 per cent, recovering from two consecutive down days. France’s Cac 40 was up 0.4 per cent. while Germany’s Dax rose 1.1 per cent.
Asian stocks were also higher, propelled by the momentum from Wall Street. Hong Kong’s Hang Seng index added 0.9 per cent and Japan’s Topix rose 1.1 per cent.
China’s CSI 300 was the outlier, falling 0.1 per cent, and extending its losses from earlier in the week when official data pointed to a slowdown in the country’s post-pandemic recovery.
