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Equities rebound, initial jobless claims fall

Results from the big banks provide a strong start to the third-quarter

October 19, 2021 / 01:20 PM IST

In the continuation of the bull run, U.S. equities returned to within 2% of all-time highs, as earnings season kicked off into high gear, led by strong results from the big banks. The improved sentiment has favoured cyclical assets, with value and small-caps, along with the energy and financial sectors, leading the way recently.

The September retail sales report showed a 14.3% year-over-year increase in retail spending. This is exceptionally strong by historical standards, reflecting the ongoing rebound in the economy. At the same time, this was half the growth rate seen in May and was the slowest rate of spending growth since March, reflecting the Delta-driven lull in consumption.

Initial jobless claims fell last week to 293,000, the first reading below 300,000 since March 2020. For perspective, initial claims peaked at a whopping 6.15 million in early April, when the unemployment rate was just below 15%. This is an encouraging data point because we view declining initial claims as a leading indicator of positive employment conditions.

For the week, the three bellwethers ended the week with synchronised and significant rises. The Dow moved up 1.58%, the S&P 500 gained an impressive 1.82%, while the tech-heavy Nasdaq gained a whopping 2.18%.

Moneycontrol journalists were not involved in the creation of the article

first published: Oct 18, 2021 01:09 pm
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