Market futures are mixed ahead of this morning’s bell, although the Dow — which rose a whopping 345 points (+1.39%) yesterday — looks to open in the green again this morning. And the Nasdaq and Russell 2000 closed Wednesday at new all-time highs. If we are indeed in the late cycle of our current multi-year bull market, the major indexes are certainly not acting like it.
There are more reasons this morning for bullish sentiment to continue: new Initial Jobless Claims again fell within our new-ish very low range of 220K-225K, at 222K for last week. The previous week’s tally was raised by 2000 claims, but still to only 223K, within this decades-low range. Although, one outlier in the past month puts the 4-week average just above this range, at 225.5K. But considering that for years we’d been hoping for weekly claims to finally get beneath 300K (in the wake of the Great Recession nearly a decade ago), we’ve definitely come a long way.
Nevertheless, the U.S. labor market remains in excellent shape — near full-employment but somehow continuing to get tighter. Continuing claims last week of 1.74 million actually rose 21K from the previous week, but these figures are still the lowest we’ve seen since the Three Dog Night was topping the pop charts. (For those missing the reference, weekly jobless claims metrics totes rock.)
Numbers like these assert last week’s very strong non-farm payroll report, which saw another 223K jobs created in May, while the Unemployment Rate fell to pre-millennium lows at 3.8%. Nothing in last week’s jobless claims appear to be dampening the outlook for next month, either, especially as long-dormant industries like Construction and Manufacturing continue to take up slack in domestic labor.
These results also help solidify the view that the next Federal Reserve meeting next week will bring about the second quarter-point interest rate hike, as expected, to a 1.75%-2.00% range. This is still historically low, but helps provide at least a little room to cut should the U.S. economy hit a significant dry patch in the months and years ahead. Present data toward this end simply does not exist, although potential pitfalls are already visible, whether in trade friction with China and our North American neighbors or further shakiness in developments within the Eurozone.
Calendar Q2 does not end for another 3+ weeks, and a plethora of new earnings reports aren’t expected until after the 4th of July. So in the meantime, no news is good news, and (lately) actual news is often good news, too.