Stocks Rise After Drop in Jobless Claims

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The S&P 500 headed toward a new record after fresh data showed a drop in jobless claims and a rise in orders for durable goods.

The S&P 500 added 0.6% by mid morning, on track for a closing high. The Dow Jones Industrial Average gained 240 points, or 0.7%. The tech-heavy Nasdaq Composite rose 0.8%, also on track for a high.

Stocks have risen this week and market volatility has collapsed, reflecting investors’ easing concerns about higher inflation and tighter monetary policy. Money managers are growing more assured that interest rates won’t rise for a while: that has sent technology stocks roaring higher in recent days and pushed the Nasdaq Composite Index to a fresh high.

“In the context of strong growth, markets can digest slightly less supportive monetary policy,” said Sebastian Mackay, a multiasset fund manager at Invesco. “The outlook for earnings is still pretty strong, I think central banks can afford to think about removing some of what’s been put in place.”

The S&P 500’s tech sector outperformed the broader market on Thursday, adding 0.9% in recent trading. The revival in stocks offering potentially high future growth marks a sharp shift. In recent months, investors piled into corners of the market that would benefit from rising bond yields and an improving economy, like the energy and financials sectors within the S&P 500.

In one sign of investors’ return to growth stocks,

Tesla Inc.’s

shares rallied, gaining 4.4% in recent trading.

The latest data on weekly jobless claims, a proxy for layoffs, showed that 411,000 people applied for unemployment benefits. That was slightly less than the prior week’s 418,000, which stemmed from an unexpected increase.

“The labor market is pivotal, it is clearly one of the targets of the Federal Reserve,” Monica Defend, global head of research at Amundi, said before the data was released. “It’s what is restraining the Fed from acting more boldly.”

Orders for durable goods rose 2.3% in May, albeit at a slower pace than economists expected. Orders slipped in April, partly because the global computer-chip shortage caused backlogs in the auto industry.

In bond markets, the yield on the 10-year U.S. Treasury note hovered around 1.480%, down from 1.486% on Wednesday. Yields fall as bond prices rise.

Recently, the U.S. inflation rate reached a 13 year high, triggering a debate about whether the United States is entering an inflationary period similar to the 1970s. In this video, WSJ speaks with two economists as well as WSJ’s John Hilsenrath to learn what consumers can expect next. Photo: Alexander Hotz

Overseas, the pan-continental Stoxx Europe 600 rose 0.9%, while the U.K. benchmark FTSE 100 edged up 0.6%.

The yield on 10-year U.K. government bonds recently ticked down to 0.744% from 0.781% on Wednesday after the Bank of England kept interest rates and its asset purchase facility steady, while raising projections for economic growth and inflation. The pound weakened 0.3% against the dollar as traders unwound bets that the policy makers would signal a rate increase in the near future, similar to the Federal Reserve last week.

“Expectations in the market for the Bank of England to follow a similar path as the Fed now seem premature,” said

Jordan Rochester,

a currency strategist at Nomura. “The market was hoping for some signs of inflation risks for the BOE to warrant earlier pricing of rate hikes.”

More rate hikes would lead to a higher risk-free rate and would likely strengthen the pound by attracting more foreign capital, he said.

Hong Kong’s Hang Seng Index edged up 0.2% by the close of trading, while Japan’s Nikkei 225 ended the day flat.

Stocks are grinding higher, reflecting easing concerns about higher inflation and tighter monetary policy.



Photo:

Courtney Crow/Associated Press

Gunjan Banerji contributed to this article.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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