By Yasin Ebrahim
Fintech Zoom – The Dow remained near a record high Thursday, as cyclicals continued to ride the economic optimism as jobless claims fell sharply, while tech struggled for direction amid ongoing fears of inflation.
The number of people filing for unemployment dropped by 92,000 to 498,000 people in the week ended May 1, topping economists’ forecast for a drop to 540,000. That was the lowest level of claims since March 2020.
“Given the tightness of the labor market, as reported in business surveys, we expect claims to fall for the foreseeable future, with sub-300K a reasonable objective for the summer,” Pantheon Macroeconomics said.
The data about the fall in jobless claims comes just a day ahead of the crucial nonfarm payrolls due Friday. Analyst expect the economy created about 978,000 jobs last month.
Consumer staples were among the best performing sectors during the day following a rally in Kellogg (NYSE:K) as the Special K and Pringles owner raised its full-year guidance after “strong” Q1 results.
“This strong start to the year enables us to raise our full-year financial outlook, and underscores confidence in our ability to sustain balanced financial delivery,” Kellogg said.
PayPal (NASDAQ:PYPL), meanwhile, reported performance that topped Wall Street estimates on both the top and bottom line. The online payments company also touted an upcoming digital wallet as it looks to capitalize on the increasing cryptocurrency demand.
Moderna (NASDAQ:MRNA), fell 2% after it reported mixed first-quarter results as revenue fell short of estimates. The drug maker lifted its forecast for its Covid-19 vaccine sales by 4.3%, to $19.2 billion.
Tech, meanwhile, was higher in choppy trade, though sentiment continued to be skittish somewhat amid fears rising inflation could force the Federal Reserve to tightened monetary policy sooner than expected.
Still, with signs that inflation continues to heat up, Wall Street continues to back cyclicals as the corner of the market that will advance as the economy continues to expand.
“Tech has had its day in the sun, [producing] a lot of wealth for investors through COVID and over the last decade,” Darren Schuringa, CEO of ASYMmetric ETFs said in an interview with Fintech Zoom earlier this week. “These [cyclicals] are great hedges against inflation, so it makes sense to be taking some of your money and repositioning.”
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