B y Joy Wiltermuth and Thornton McEnery
The S&P 500 index and the Nasdaq Composite ended at fresh records Thursday, after data showed weekly jobless benefit claims improved slightly ahead of Friday’s August employment report.
How did stocks trade?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.32% closed up 131.29 points, or 0.4%, higher at 35,443.82.
The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.47% finished up 12.86 points, or 0.3%, to a record 4,536.95, following an intraday all-time high at 4,545.85.
Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.38% eked out a gain of 21.8 points, or 0.1%, ending at a record 15,331.18, after setting an intraday all-time trading high of 15,380.07.
The Dow /zigman2/quotes/210598065/realtime DJIA +0.32% fell 48 points on Wednesday to close at 35,312, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.47% ended above flat and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.38% outperformed, rising 0.3%.
What drove the markets?
Stocks were back to setting records Thursday, after weekly initial jobless benefit claims dropped by 14,000 to 340,000 in the week ended Aug. 28, the Labor Department reported Thursday.
The upbeat action comes ahead of Friday’s August employment report, which will give markets their next chance to guess when — and by how much — the U.S. Federal Reserve will begin slowing, or tapering, its program of $120 billion in monthly bond purchases.
“The jobs report is going to be big; it’s always big,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, in a phone interview, adding that a weak payroll report could potentially delay tapering of the central bank’s large-scale purchases, but that’s not the only thing on investors’ minds.
“We know the Fed is going to taper. There’s no doubt about it,” Pavlik said. “What we don’t know is by how much. That’s the question.”
Oxford Economics’ economists Nancy Vanden Houten and Gregor Daco said they expect jobless claims to continue improving, but will be watching to see if businesses and workers have become more cautious due to the spread of the coronavirus from the delta variant, in a research note.
Fed Chairman Jerome Powell has signaled that the central bank would be watching employment data as it mulls the end of its pandemic-era measures to add liquidity to markets.
On Wednesday, weak numbers from payroll provider ADP’s private-sector employment report and the Institute for Supply Management’s measure of factory jobs underscored the room the U.S. economy still has to grow in terms of employment.
Beyond the Fed, investors were also looking past the economic devastation tied to Hurricane Ida, pegged as the most expensive ever , which made landfall in Louisiana over the weekend, before triggering a state of emergency in New York City and New Jersey early Thursday due to flooding, while also threatening New England with more tornadoes.
“I think there’s still some trepidation about what September and October hold,” Pavlik said. “September often is a very hard month for the stock market, and I think that’s on the back of peoples’ minds.”
Should a correction hit stocks, Pavlik thinks investors will buy, since many have been “waiting for bargains,” similar to how shoppers wait for Labor Day and the Thanksgiving holiday sales before buying a new refrigerator or other large appliances.