U.S. stocks rose on March 7, pushing the Dow Jones Industrial Average to a new record high as markets responded to a Labor Department report indicating that the number of jobless claims fell to a six-week low during the period ending during the prior week.
Rising U.S. stocks
The Dow had risen to 14,342.16 by 11:43 a.m. in New York, which was 0.3 percent higher for the day, Bloomberg reports. At the time, the blue-chip S&P 500 Index was up 0.2 percent for the day at 1,544.79. The transaction volume for stocks contained in the index was 12 percent below its 30-day average at this time in the session. Earlier in the week, the Dow rose past its previous record high, which was set in 2007.
"There's an underlying element of support for the labor market and it's really driven by housing and potentially construction finally coming back," Robert Lutts, chief investment officer of Boston-based Cabot Money Management, which has $500 million under management, told the news source in a telephone interview.
He added that "we're starting to see some health in some of those dormant areas of the economy, so quantitative easing and lower interest rates are finally having an impact and the stock market is of course telling us that."
The Department of Labor report reveals that the number of people filing these initial applications for unemployment benefits fell to 340,000 during the week ending on March 2. This was the second consecutive period where the number of these claims dropped. The four-week moving average of claims, which is frequently thought of as a more stable indicator of the strength of the labor market, fell to its lowest point in five years during the period.
"The four-week moving average has come down significantly," Art Hogan, market strategist at Lazard Capital Markets, told Dow Jones Newswires. "And it correlates with the ADP number, which is usually a pretty good sign of where we are headed, so another piece of good news that could keep the train rolling."
February jobs report
The Labor Department's jobs report for February was scheduled for released on March 8, 2013. Economists participating in a Bloomberg survey provided a median forecast of 163,000 new positions created last month. They also predicted that the unemployment rate will remain unchanged at 7.9 percent.
"The general employment picture in the U.S. has stabilized," Troy Logan, chief economist at Exton, Pennsylvania-based Warren Financial Service, told the news source. "We're still at a very high level of unemployment and underemployment, but it's not getting worse and that's a key factor."
There is significant speculation surrounding where the stock market will head next. Fred Dickson, chief investment strategist at Davidson Cos., cited that markets have historically fallen backward after reaching record levels, according to MarketWatch.
He wrote in an emailed commentary that "typically, the stock market moves up about 2% to 3% following a breakout to a new all-time high, then begins a modest correction."
Brian Belski, the New York-based chief investment strategist at BMO Capital Markets, took a different view during a Bloomberg interview, stating that "we've called this whole market the bunker bull market, meaning people are still in the bunker and not really believing it quite yet."
"When people find out and realize they're losing money for several months in a row, and they'll see the positive returns in stocks, they'll come back."
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