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Wall St set to open higher as jobless claims data calm rate hike worries

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2022-12-29T14:12:08Z

A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 14, 2022. REUTERS/Andrew Kelly

Wall Street’s main indexes were set to open higher on Thursday as data pointing to signs of a cooling labor market eased worries over future interest rate hikes by the U.S. Federal Reserve.

Initial claims for unemployment benefits rose 9,000 to a seasonally adjusted 225,000 for the week ended Dec. 24, the Labor Department said. Economists polled by Reuters had forecast 225,000 claims for the latest week.

The report suggested that the rapid interest rate hikes were starting to take a toll on the labor market, bolstering hopes that the U.S. central bank would dial down its aggressive stance.

“Signs of the job market beginning to weaken is certainly apparent,” said Peter Cardillo, chief market economist, Spartan Capital Securities LLC.

“We’re at the end of the year and of course, the market has not performed well. We’re seeing some bargain hunting coming in today.”

Traders held on to bets of a 25 basis point rate hike from the Federal Reserve in February and see rates peaking at 4.92% in June 2023. .

A strong labor market and resilient American economy have fueled worries that interest rates could stay higher for longer even though easing inflationary pressures keep alive hopes of smaller increases.

Tesla shares (TSLA.O) rose 5.4% in premarket trading after Chief Executive Elon Musk told staff they should not be “bothered by stock market craziness”. They have lost nearly 70% of their value so far this year.

Major technology and growth stocks like Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O), Microsoft (MSFT.O) and Amazon.com Inc (AMZN.O) gained between 0.9% and 1.9%, helped by a decline in the 10-year Treasury yield .

The Fed’s aggressive monetary policy tightening has hammered equities this year, with the benchmark S&P 500 (.SPX) shedding 20% and tech-heavy Nasdaq losing nearly 35% in value.

Wall Street’s main indexes dropped over 1% on Wednesday, with the Nasdaq (.IXIC) hitting a 2022 closing low as rising COVID cases in China and geopolitical tensions added to fears of a likely recession in 2023.

However, investor preference for high-dividend yielding stocks with steady earnings have staved off a steeper decline in the industrials-heavy Dow Jones (.DJI), which is down just 9.5% on the year.

At 8:42 a.m. ET, Dow e-minis were up 172 points, or 0.52%, S&P 500 e-minis were up 29 points, or 0.76%, and Nasdaq 100 e-minis were up 116.25 points, or 1.08%.

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