Markets React to Unfavorable Jobless Claims Data

The day began with an unpleasant surprise as jobless claims figures were released, causing a significant drop in yields. This, in turn, led to a surge in stocks, gold, oil, and crypto, while the dollar took a hit. The possibility of a rate cut seems to be back on the table.

Market Response to Dovish Shift

A dovish shift in the market was beneficial for stocks, which experienced a "squeeze" feel due to low liquidity. Goldman's trading desk noted that the trading session was the lightest of the year in terms of notional value, which likely contributed to the upward trend.

Performance of Different Sectors

The Dow and Small Caps led the pack with an almost 1% increase, while Nasdaq struggled to stay in the green. Interestingly, this marked the seventh consecutive daily gain for The Dow, a winning streak not seen since July 2023. The market was largely driven by buybacks, as both Hedge Funds and Long-Onlys were sellers on the day.

Bitcoin and Gold Surge

Bitcoin benefitted from a small net inflow into ETFs, and as the dollar weakened, crypto was bid higher. Gold also saw a significant increase, surging back above $2340.

Oil Prices and Dollar Value

Oil prices ended slightly higher after fluctuating throughout the day. The dollar, on the other hand, experienced a sharp decline.

Market Volatility

While the market seemed to have calmed down by Monday, volatility is expected to return with the release of the CPI. The market is already pricing in some anxiety for the coming week.

Closing Thoughts

It's fascinating to observe how a single piece of data, such as jobless claims, can trigger such a significant reaction across various markets. What are your thoughts on these market movements? Do you think the rate cut expectations will be fulfilled? Share your insights and discuss with your friends. Don't forget to sign up for the Daily Briefing, delivered to your inbox every day at 6pm.