The Dow Jones (DJIA) is set to open Thursday’s trading session in positive territory on an encouraging jobs report.
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Initial jobless claims for the week ended September 13 fell by 33,000 to 231,000, lower than the consensus estimate of 240,000. The market breathed a sigh of relief on the data, as last week’s reading of 263,000, which was revised higher to 264,000, marked the highest level since October 2021.
Continuing jobless claims of 1.920 million fell from 1.939 million and were also below the estimate of 1.950 million. At the same time, these claims remain elevated compared to recent years.
Powell Cites Labor Market Weakness for Rate Cut
On Tuesday, the Fed cut rates by 25 bps, with Fed Chair Jerome Powell citing warning signals in the labor market as the biggest factor behind the central bank’s decision, adding that he no longer viewed it as “very solid.”
“Labor demand has softened, and the recent pace of job creation appears to be running below the break-even rate needed to hold the unemployment rate constant,” Powell said in a press conference.
With the upbeat initial and continuing jobless claims data, the Fed is less incentivized to cut rates. That’s been reflected in the odds of a rate cut at the October 17 Federal Open Market Committee (FOMC) meeting falling to 83.4% compared to 87.4% yesterday, according to CME’s FedWatch tool.
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