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Stocks Rally on Softer Inflation and Strong Earning

                                      U.S. stocks surged in premarket trading today following softer-than-expected inflation data and upbeat fourth-quarter earnings reports from major companies. The Bureau of Labor Statistics reported that core inflation, which excludes food and energy prices, rose by 3.2% in December, below forecasts for a 3.3% annual increase. This news has raised hopes for a potential second rate cut by the Federal Reserve this year. Investors were also buoyed by strong earnings reports from leading financial institutions. JPMorgan Chase reported its highest annual profit on record, while BlackRock and Goldman Sachs posted impressive quarterly results. The positive sentiment was reflected in the stock market, with U.S. stock index futures soaring by 1.5-1.7%. The dollar fell by 0.5% against a basket of major currencies, and U.S. Treasury yields dropped 8.6 basis points to 4...
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US Weekly Jobless Claims Fall More Than Expected

 

The number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting that fears of the labor market unraveling were overblown. Initial claims for state unemployment benefits dropped by 17,000 to a seasonally adjusted 233,000 for the week ending August 3. This marks the largest drop in about 11 months.

Economists had forecasted 240,000 claims for the latest week, but the actual decline exceeded expectations. While claims have been on an upward trend since June, factors like temporary motor vehicle plant shutdowns and disruptions caused by Hurricane Beryl contributed to the volatility. Despite this, layoffs remain generally low, and government data from June indicated the lowest layoffs rate in over two years.

The slowdown in the labor market is primarily driven by less aggressive hiring, influenced by the Federal Reserve’s interest rate hikes in 2022 and 2023. However, the recent monthly nonfarm payrolls report showed a significant slowdown in job gains in July, raising concerns that the labor market may be deteriorating. The Fed is closely monitoring the situation and may consider reducing borrowing costs in their next policy meeting in September.


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