The Dow Jones Industrial Average and the S&P 500 indexes managed to chalk up record closing highs on Thursday, turning higher at the last minute after a Politico report that Federal Reserve Governor Jerome Powell is the leading candidate for the nominee for Fed chair.
Wall Street has been anxious to hear who President Donald Trump will pick as the nominee. A decision like Powell would likely be a continuation of the current stock market-friendly monetary policy that has helped fuel the market’s more than eight-year bull run.
Stocks had been recovering from early losses for much of the afternoon but the S&P 500 and Dow were still a tad lower just before the Powell report.
Powell was among several names circulating as possible picks, including Yellen. Others include Trump’s chief economic adviser, Gary Cohn, former Fed Governor Kevin Warsh and Stanford University economist John Taylor. The White House on Wednesday said Trump will announce his decision on the matter in the “coming days.”
Tech shares were among the day’s largest drags, led by Apple, which fell 2.4 percent in its largest daily percentage decline since Aug. 10 as doubts about its double 2017 iPhone release strategy weighed on investors.
Stocks have posted a string of record highs in recent weeks, and the Dow closed above 23,000 for the first time on Wednesday.
The day also marked the 30th anniversary of the 1987 Black Monday stock market crash. Most traders see a repeat of the crash as unlikely because of modern trading technology and other changes.
There was some profit-taking in the broader tech sector, which has had a strong run so far this year, gaining about 30 percent and helping drive the market’s recent record run. The tech index was down 0.4 percent on the day.
Weighing on the market early as well was some disappointing news on the earnings front. United Airlines fell 12.1 percent, weighing on other airlines stocks after UAL’s earnings fell due to flight cancellations during the hurricane season. American Airlines closed down 1 percent in sympathy.
Shares of eBay fell 1.8 percent a day after it reported results.
Approximately 5.8 billion shares changed hands on the major domestic equity exchanges, as compared to the 5.9 billion share daily average for the past 20 trading days, according to Thomson Reuters data.
The Day’s Economic News
According to a report released by the Labor Department on Thursday morning, the number of new claims for unemployment benefits fell to its lowest level in more than 44-1/2 years last week, pointing to a rebound in job growth after a hurricane-related decline in employment in September.
The labor market outlook was also bolstered by another report on Thursday showing a measure of factory employment in the mid-Atlantic region reaching to a record high in October. The signs of labor market strength will likely ensure that the Fed raises interest rates in December.
According to the report, initial claims for state unemployment benefits fell 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973. However, the decrease in claims, which was the largest since April, was probably exaggerated by the Columbus Day holiday on Monday.
Claims are declining as the impact of Hurricanes Harvey and Irma washes out of the data. The hurricanes, which lashed Texas, Florida and the Virgin Islands, boosted claims to an almost three-year high of 298,000 at the start of September.
A Labor Department official said claims for the Virgin Islands and Puerto Rico continued to be impacted by Irma and Hurricane Maria, which destroyed infrastructure. As a result, the Labor Department was estimating claims for the islands.
Nonfarm payrolls fell by 33,000 jobs in September as Hurricanes Irma and Harvey left more than 100,000 restaurant workers temporarily unemployed. The Virgin Islands and Puerto Rico are not included in nonfarm payrolls.
Last week marked the 137th consecutive week that claims remained below the 300,000 level, which is associated with a robust labor market. That is the longest such stretch since 1970, when the labor market was smaller.
The labor market is near full employment, with the jobless rate at a more than 16-1/2-year low of 4.2 percent. Tightening labor market conditions likely keep the Fed on track to raise interest in December for a third time this year, even as inflation remains moderate.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 9,500 to 248,250 last week.
The claims data covered the survey week for October nonfarm payrolls. The four-week average of claims fell 20,500 between the September and October survey periods, supporting views of a rebound in job growth this month.
In a separate report on Thursday, the Philadelphia Fed said its measure of factory employment in the mid-Atlantic region soared 24 points to a record high reading of 30.6 in October.
The average workweek index also increased 8 points to a reading of 19.4. It said no firms reported decreases in employment this month. The robust labor market readings helped to lift the Philadelphia Fed’s current manufacturing activity index four points to a five-month high of 27.9 in October, offsetting declines in new orders and shipments measures.
Also underscoring labor market strength, the claims report showed the number of people still receiving benefits after an initial week of aid decreased 16,000 to 1.89 million in the week ended Oct. 7, the lowest level since December 1973.
The four-week moving average of so-called continuing claims fell 22,750 to 1.91 million, the lowest level since January 1974.
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