Stocks wobble after key data as Micron falls

The number of continuing claims for unemployment benefits reached its highest level since November 2021 last week, adding to signs that the labor market is cooling as unemployed workers struggle to find new jobs.

New data from Ministry of Labor The data showed that about 1.84 million claims were filed in the week ending June 22, up from 1.82 million the previous week. Meanwhile, the four-week moving average of weekly jobless claims rose about 3,000 to 236,000, the highest rate since September 2023.

The data “sends a warning signal that the labor market may be in a weak phase,” said Jeffrey Roach, chief economist at LPL Financial.

The key question facing the Fed is whether this easing is just another sign that the labor market is returning to normal or whether it is an indicator that higher interest rates could seriously harm the US economy.

A growing number of economists believe the risks are tilted toward a painful outcome.

Nancy Vanden Houten, a US economist at Oxford Economics, cautioned against reading too much into unemployment claims data, which can be volatile from week to week, but noted that any further upward movement in the direction of weekly jobless claims would undoubtedly be a point of concern. .

“A sustained rise in initial claims would point to more labor market weakness and a larger rise in the unemployment rate than we currently expect and would add further support to our argument for the Fed to begin cutting rates in September,” Vanden Houten wrote in a note on Thursday.

The Fed has largely stood firm on its argument that it must gain “greater confidence” in inflation's downward path before cutting interest rates. In his last press conference on June 12, Fed Chairman Jerome Powell noted that the labor market is continuing to return to normal, and in the Fed's view, it has not shown real signs of concern yet.

“We're seeing a gradual cooling — a gradual move toward a better balance. We're watching that carefully for signs… of something more, but we're not really seeing that,” Powell said.

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