Increased Jobless Claims Could Fuel Rate Cuts and S&P 500

The markets these days have been especially sensitive to economic data, as any indication of weakness could mean rate cuts may finally be close. That, in effect, should also push the S&P 500 to even higher heights.

The capital markets rolled out the red carpet for rate cuts in last year’s rally, but the return of the higher-for-longer narrative got in the way of that red carpet walk. Conversely, a data-dependent Fed could see jobless claims rise, thus providing the impetus to finally consider loosening monetary policy.

“New claims for jobless benefits rose to 215,000 in the week ending Feb. 24, up from a revised 202,000 in the prior week,” reported Investor’s Business Daily. “The four-week average of weekly claims fell 3,000 to 215,500.”

The rise in jobless claims could just be the start. As IBD mentioned, economists could be expecting those initial numbers to keep climbing. If that’s indeed the case, the indication of slowing economic growth could be the catalyst that the Fed wants to see before cutting interest rates.

“Some economists are expecting a significant rise in jobless claims over coming months, which would surely ease the Fed’s concerns about cutting rates too soon,” the report confirmed.

“We suspect the labor market will start to look significantly weaker by around the middle of the spring,” wrote Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

Trade the S&P Ebb and Flow With Leverage

Economic data will continue to be a market mover until the Fed ultimately quashes the higher-for-longer narrative. Thankfully, the presence of inverse exchange-traded funds means traders can exercise market flexibility irrespective of what the S&P 500 does and how investors react accordingly.

For triple leverage when the S&P 500 continues to push to record highs, traders may want to look at the Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL). On the flip side, traders can leverage bearishness in the S&P 500 via the Direxion Daily S&P 500 Bear 3X ETF (SPXS).

Traders who don’t mind the volatility can track the sensitivity of S&P 500 moves even more closely with the Direxion Daily S&P 500 High Beta Bull 3X Shares (HIBL). And on the bearish side, traders can use the Direxion Daily S&P 500 High Beta Bear 3X Shares (HIBS).

Both SPXS and SPXL offer thrice the leverage. So only seasoned traders should use these products.

For more news, information, and strategy, visit the Leveraged & Inverse Channel.