How Will This Week’s Jobless Claims Affect Stock Market Momentum?
The jobless claims for last week are in and indicate that employment is at a six-week high and the economy is strong.
Quick overview
- Jobless claims have fallen to their lowest point in three months, signaling a strengthening economy.
- The stock market, including the Dow Jones, S&P 500, and Nasdaq, is experiencing near record highs.
- Despite low hiring rates, the decrease in jobless claims suggests economic stability and resilience.
- Inflation has risen slightly, but the Federal Reserve may still proceed with planned interest rate cuts in 2025.
The stock market could be headed for a rally above its current record highs, because jobless claims fell in this week’s report and signaled that the economy is strengthening.
As jobless claims drop, the stock market tends to grow, and that is what we are likely looking at for Thursday with a new jobless claims report for the week. For last week, the jobless claims numbers dropped to their lowest point in three months, a very positive sign for the economy.
Hiring rates are low right now, but at least the number of jobless claims is not rising. Unemployment benefit claims fell to 217,000, a drop of 4,000 for the week. This is the lowest these numbers have been since April, and stock market investors should start rejoicing.
The stock indices are already high, with the Dow Jones, S&P 500, and Nasdaq posting some of their best numbers for the year. In fact, both the Nasdaq Composite and S&P 500 are recording near record highs. Indicators like jobless claims show investors where the economy is at and where it is headed. The fact that these numbers are trending lower indicates that the economy is becoming more resilient and harder to weaken.
Jobless Claims and Inflation at a Glance in 2025
For the last six weeks, jobless claims have dropped, pointing toward economic stability and a vital job market. This report is not the only indicator that analysts and economists will look at, but it gives them a strong indication of where the economy is headed and what the market is likely to do. The Federal Reserve has continued to hold off on interest rate cuts, issuing no new ones in months but indicating that two new cuts are still to come in 2025. Those rates could be cut at the Fed meeting next week.
Inflation is increasing based on the latest report, which showed that in June, inflation rose from 2.4% to 2.7%. That is higher than the Federal Reserve would like it to be for them to issue interest rate cuts, but they may go ahead with the cuts anyway since they have planned two additional ones in 2025. Jobless claims are a good inflation indicator, however, and they point toward slowly decreasing inflation.
Even though jobless claims have decreased, they are expected to decrease further in the coming weeks as the economy strengthens. Investors should expect a healthy market that will not lose its stability easily on the first small negative factor that occurs in the next week or two.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save