U.S. Pull Back Off Highs But Remain Firmly Positive

After moving sharply higher early in the session, stocks have given back some ground over the course of the trading day on Thursday. The major averages have pulled back off their best levels but remain firmly positive.

The major averages have moved back to the upside in recent trading but remain well off their highs. The Dow is up 231.93 points or 0.9 percent at 25,966.90, the Nasdaq is up 106.02 points or 1 percent at 10,260.65 and the S&P 500 is up 26.76 points or 0.9 percent at 3,142.62.

The early rally on Wall Street came following the release of a closely watched Labor Department report showing another record spike in employment in the month of June.

The report said non-farm payroll employment skyrocketed by 4.8 million jobs in June after soaring by an upwardly revised 2.7 million jobs in May.

Economists had expected employment to surge up by about 3.0 million jobs compared to the spike of 2.5 million jobs originally reported for the previous month.

The Labor Department also said the unemployment rate dropped to 11.1 percent in June from 13.3 percent in May. The unemployment rate had been expected to dip to 12.3 percent.

The better than expected data reinforced investor confidence in a swift economic recovery, although a number of economists have pointed out that the employment numbers are still well below pre-pandemic levels.

“The 4.8 million rise in non-farm payrolls in June provides further confirmation that the initial economic rebound has been far faster than we and most others anticipated,” said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, “But that still leaves employment 9.6% below its February level and with the spread of the virus accelerating again, we expect the recovery from here will be a lot bumpier and job gains far slower on average.”

Meanwhile, a separate Labor Department report showed first-time claims for U.S. unemployment benefits fell by much less than expected in the week ended June 27th.

The Labor Department said initial jobless claims dropped to 1.427 million, a decrease of 55,000 from the previous week’s revised level of 1.482 million.

Economists had expected jobless claims to tumble to 1.355 million from the 1.480 million originally reported for the previous week.

The report also showed an increase in continuing claims, a reading on the number of people receiving ongoing unemployment assistance, which climbed by 59,000 to 19.290 million in the week ended June 20.

In other U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened more than expected in the month of May amid a steep drop in the value of exports.

Sector News

Energy stocks have pulled back off their best levels of the day but continue to see considerable strength in mid-day trading. The strength in the sector comes as the price of crude oil for August delivery is rising $0.33 to $40.15 a barrel.

Reflecting the strength in the sector, the NYSE Arca Natural Gas Index is up by 3 percent, the Philadelphia Oil Service Index is up by 2.5 percent and the NYSE Arca Oil Index is up by 1.9 percent.

Significant strength also remains visible among steel stocks, as reflected by the 2 percent jump by the NYSE Arca Steel Index.

Chemical, semiconductor and airline stocks also continue to turn in strong performances, although most of the major sectors have given back ground since the early rally.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while China’s Shanghai Composite Index spiked by 2.1 percent.

The major European markets also showed strong moves to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1.3 percent, the French CAC 40 Index and the German DAX Index surged up by 2.5 percent and 2.8 percent, respectively.

In the bond market, treasuries have turned higher over the course of the session after an early slump. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 0.668 percent.

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