Wall Street jumps on hopes worst for labor market is over

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(Reuters) – Wall Street jumped 1% on Thursday as a third straight decline in weekly jobless claims raised hopes the worst of the coronavirus pandemic’s impact on the labor market was over, while energy stocks zoomed 5% on a rebound in oil prices.

FILE PHOTO: A woman walks in the rain outside the New York Stock Exchange (NYSE) in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 13, 2020. REUTERS/Andrew Kelly

Weekly jobless claims fell to 4.43 million from a revised 5.24 million, but it was still staggering and took the total in the past five weeks to a record 26 million, wiping out all the U.S. jobs created since the global financial crisis.

“The decline in initial jobless claims is encouraging, but the damage has already been done with the insured unemployment rate surging to a record high in the (previous) week,” said Paul Ashworth, chief U.S. economist at Capital Economics.

The energy index .SPNY gained the most among the 11 S&P 500 sectors as oil prices recovered in a tumultuous week that saw U.S. crude futures crash below zero for the first time in history.

U.S. stock indexes have rallied this month on a raft of global stimulus, but the benchmark S&P 500 remains more than 15% below its record high as worsening economic indicators foreshadow a deep global recession.

A survey showed U.S. business activity plumbed new record lows in April, mirroring dire figures from Europe and Asia as strict stay-at-home orders crushed production, supply chains and consumer spending.

Still, the mood was risk-on with the only decliners among S&P 500 sub-indexes being defensive utilities .SPLRCU and consumer staples .SPLRCS. The banking sub-sector .SPXBK tracked a slight rise in Treasury yields.

The CBOE volatility index has retreated from 12-year peaks hit last month, but remains well above levels seen in the past two years and analysts have warned of another selloff as Corporate America issues worrying forecasts for the year.

“What we are looking for is the turning point where the more cyclical companies start to outperform,” said Bill Callahan, investment strategist at Schroders in New York.

“So when we see light at the end of the tunnel, you will start to see industrial, financials, maybe even energy companies start to do better and outperform.”

Meanwhile, Congress was preparing nearly $500 billion more in aid for small businesses and hospitals, which is expected to clear the House of Representatives later in the day.

At 11:13 a.m. ET the Dow Jones Industrial Average .DJI was up 311.01 points, or 1.32%, at 23,786.83, the S&P 500 .SPX was up 34.94 points, or 1.25%, at 2,834.25 and the Nasdaq Composite .IXIC was up 110.05 points, or 1.30%, at 8,605.43.

Blackstone Group Inc (BX.N) jumped 6% as the asset manager posted a 4% rise in its first-quarter distributable earnings, driven by a surge in management fees.

A 10.3% jump for Las Vegas Sands Corp (LVS.N) lifted U.S. casino operators after the company predicted a speedy recovery in Asia on pent-up demand.

Shares in Wynn Resorts (WYNN.O), MGM Resorts (MGM.N) and Melco Resorts (MLCO.O) gained between 4% and 8%.

Advancing issues outnumbered decliners more than 3-to-1 on the NYSE and on the Nasdaq.

The S&P index recorded six new 52-week highs and no new low, while the Nasdaq recorded 25 new highs and five new lows.

Reporting by Shreyashi Sanyal and C Nivedita in Bengaluru; Editing by Sagarika Jaisinghani, Anil D’Silva and Arun Koyyur

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