Stock Market News From Aug. 8, 2024: Why Stocks Are Rising After Jobless Claims; Dow, Nasdaq Climb; Nvidia, Lumen, Eli Lilly, Bumble, and More Movers; Treasury Yields (2024)

What to Watch Today

The Labor Department said initial jobless claims were 233,000 for the week ending Aug. 3, which was below the consensus of 240,000 among economists polled by FactSet.

After all the worries about a possible recession, the number was enough to send stocks higher. The S&P 500 had its best day since 2022, and most of its stocks joined the rally.

Not even another weak Treasury auction—this time for the 30-year—could dampen the mood.

The S&P 500 notched its best day since 2022 after Wall Street got some good news on the unemployment front.

The S&P 500 rose 2.3%, its largest percent gain since Nov. 30, 2022, according to Dow Jones Market Data. The Dow rose 683 points, or 1.8%. The Nasdaq Composite rose 2.9%. The Russell 2000 rose 2.3%.

The yield on the 2-year Treasury note rose to 4.043% while the 10-year yield was up to 3.997%. Bond yields jumped and stocks rallied after the Labor Department reported weekly jobless claims that were lower than economists were expecting.

The market has been jittery after data last week on jobs and manufacturing showed cracks in the economy. Market participants started to worry whether the Federal Reserve could conquer inflation without triggering a recession.

Odds of a 50-basis-point September rate cut fell to 55.5% from 69% on Thursday, according to the CME FedWatch Tool. Fed-funds futures suggest a 44.5% chance of a single 25 basis point cut.

Market observers were likely encouraged to see the stock market hold onto daily gains after all three major indexes blew their biggest intraday gains since 2022 on Wednesday. Not even a weak auction of government bonds could slow things down, this time around.

Another green shoot was breadth: the Invesco S&P 500 Equal Weight ETF soared today, with most of the S&P 500 stocks joining in the rally. For the bull market to continue sustainably, it will take more than just the big AI stocks to keep the S&P 500 chugging along.

A weak auction of government bonds didn’t stop the stock market’s rally this time around.

The Dow was up 700 points, or 1.9%, in the wake up an auction of 30-year Treasury notes that was forced to offer higher-than-expected yields to entice buyers. The S&P 500 was up 2.2%, on track for its best day since January 2023, according to Dow Jones Market Data. The Nasdaq Composite was up 3%.

The market’s reaction is encouraging when you consider a weak auction of 10-year notes put an end to a solid rally on Wednesday. The big three indexes closed lower, marking their largest blown gains since 2022.

Market participants weren’t so skittish today. That may be because unlike yesterday, there is ostensibly a positive catalyst driving stocks, rather than some dip buying.

Initial jobless claims came in lower than expected, which runs counter to recent fears about a potential recession.

Another day, another bad auction.

The sale of bonds expiring in 30-years, the last big event for this week, failed to garner much demand. Investors were awarded a 4.314% yield on the Treasury Department sale of $25 billion in 30-year bonds.

That’s 2.9 basis points higher than the yield seen before the bidding deadline. In other words, the Treasury had to entice investors by offering higher-than-expected returns.

The sale wasn’t as terrible as the 10-years on Wednesday, which missed by 3 basis points.

The main market indexes –S&P 500, Nasdaq Composite and the Dow–didn’t react much to the news. The strong labor market data at the start of the day is likely holding up the market.

Typically when auctions go this bad successively, the stock market can get jittery as investors feel concerned about its ability to absorb the debt.

The story is likely different this time. Wednesday saw record 2024 bond issuance from highly-rated companies. Demand was also unusually high.

When investors can get good returns on short-term Treasury bills and over 5% on investment grade bonds, the argument to go long for 10- and 30-year Treasuries weakens, even as predictions for the Fed to cut rates are strong.

This was another "lousy auction,” Andrew Brenner, head of international fixed income at NatAlliance Securities called it.