By Stephen Culp
NEW YORK (Reuters) -Wall Street gained ground and Treasury yields eased on Thursday as economic data hinted at signs of cracks in the tight U.S. labor market, indicating that the Federal Reserve’s restrictive monetary policy is beginning to work as intended.
All three major U.S. stock indexes were up modestly, the dollar backed off a near three-month high, gold advanced and benchmark U.S. Treasury yields pulled back as economic data took some of the sting out of Fed Chairman Jerome Powell’s hawkish, two-day congressional testimony.
Data released on Thursday showed U.S. jobless claims jumped by 11% last week – the largest increase in five months – while planned layoffs for February jumped four-fold, year-on-year.
Any signs of cracks in the tight labor market is good news as far as the Fed is concerned.
“(Today’s market) is being driven by the claims data coming in above expectations,” said Jay Hatfield, CEO and portfolio manager at InfraCap in New York. “The market has been yearning for any inkling that the jobs market is weakening, because the Fed believes that inflation is driven by wage increases.”
“Anything showing deceleration in the jobs market is bullish for the bond and stock market,” Hatfield added.
The Dow Jones Industrial Average rose 150.13 points, or 0.46%, to 32,948.53, the S&P 500 gained 18.89 points, or 0.47%, to 4,010.9 and the Nasdaq Composite added 75.50 points, or 0.65%, to 11,651.50.
European stocks were held back by higher-for-longer interest rate worries.
The pan-European STOXX 600 index lost 0.06% and MSCI’s gauge of stocks across the globe gained 0.33%.
Emerging market stocks lost 0.77%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.64% lower, while Japan’s Nikkei rose 0.63%.
Benchmark 10-year and shorter-dated 2-year Treasury both eased following the jobless claims data.
Benchmark 10-year notes last rose 5/32 in price to yield 3.956%, from 3.976% late on Wednesday.
The 30-year bond last fell 4/32 in price to yield 3.884%, from 3.877% late on Wednesday.
The greenback, which rose to a near three-month high during Powell’s testimony, pulled back against a basket of currencies.
The dollar index fell 0.37%, with the euro up 0.34% to $1.058.
The Japanese yen strengthened 0.84% versus the greenback at 136.22 per dollar, while Sterling was last trading at $1.1927, up 0.72% on the day.
Oil prices, under pressure in recent sessions due to concerns over the looming possibility of recession, bounced back with the help of a weaker dollar.
U.S. crude rose 0.89% to $77.34 per barrel and Brent was last at $83.17, up 0.62% on the day.
Gold jumped in opposition to softness in the dollar.
Spot gold added 1.0% to $1,831.79 an ounce.
(Reporting by Stephen Culp; Additional reporting by Marc Jones in London; Editing by Alexander Smith)