US stocks posted modest gains but a fifth consecutive increase Thursday after further supportive comments from Fed Chairman Jerome Powell and jobless claims data pointing to a solid payrolls report for January. The Dow and the S&P both advanced 0.5 percent, while Nasdaq closed the day up 0.4 percent.
Thursday’s comments from Fed Chairman Jerome Powell were broadly in line with previous statements. Chairman Powell noted that incoming data, highlighted by last week's surge in nonfarm payrolls, are not showing indications of an economic slowdown and that he doesn't see the risk of a recession in the near term. Turning to the policy outlook, he again stressed there is no preset path set for interest rates and that the Fed can be patient to see how economic risks play out. Chairman Powell also noted that the Fed’s balance sheet should be “substantially smaller” but provided no guidance on timing.
St Louis Fed President James Bullard also spoke, noting that he had argued against the rate hike made in December and will only support an increase if inflation expectations pick up. A Wall Street Journal survey of 73 private-sector economists found most respondents expect the Fed to stay on hold until mid-year at least.
Wholesale trade data scheduled for release Thursday were delayed by the government shutdown but jobless claims data were published and pointed to a solid start to 2019 for the labour market. Initial claims for the January 5 week fell 17,000 to 216,000, close to the lower end of the consensus range, while the four-week average provides an early hint for a favorable employment report for January. Claims filed by Federal employees rose as the shutdown continues.
Despite recent indicators suggesting consumer spending had remained solid over the holiday period, Macy’s fell sharply after the department store chain reported weak December sales and lowered its full-year guidance. Other major retailers also reported subdued holiday sales, with reports indicating that the trend towards online shopping remains strong.
These data reflect observations at 4:00 PM US ET. Gold was down US$4.80 to US$1287.20. Copper futures were down 0.81 percent to US$2.64. WTI spot crude was up 19 US cents to US$52.56. Dated Brent spot crude was up 11 US cents to US$61.55. The US dollar advanced against the yen, euro, pound, Swiss franc and the Canadian dollar. It retreated against the Australian dollar. The yield on the US Treasury 30 year bond was up 2 basis points to 3.04 percent while the 10 year note was up 1 basis point to 2.73 percent.