U.S. equities and stock exchange traded funds regained their footing Thursday as new jobless claims hit a five year low, pointing to a strengthening U.S. labor market.
The SPDR S&P 500 (NYSEArca: SPY) rose 0.7% during midday trading Thursday while the PowerShares Nasdaq 100 (NasdaqGM: QQQ) was 0.5% higher and SPDR Dow Jones Industrial Average (NYSEArca: DIA) was up 0.6%. [S&P 500 and Dow ETFs Test 50-Day Moving Average]
Initial claims for state unemployment benefits dipped a better-than-expected 12,000 to a seasonally adjusted 334,000, reports Jason Lange for Reuters. This marked the smallest number of first-time applicants since early May, with levels last seen prior the 2008 financial crisis.
The applications, a proxy for layoffs, has fallen 6.5% since January, which suggests employers are cutting fewer jobs, the Associated Press reports.
Previously, economists feared that federal spending cuts and higher taxes attributed to the sequestration would weigh on growth and employment.
“The downside risk from sequestration is proving much smaller than some had feared,” Mike Englund, chief economist at Action Economics LLC, said in a Bloomberg article. “Just like we dodged the bullet with the payroll tax increase earlier in the year, we seem to have dodged the bullet with sequestration.”