Following a promising start, stock markets experienced significant fluctuations during the first trading session of the new year on Thursday. The major indices oscillated wildly around breakeven levels.
Presently, the key indices are recording modest gains. The Dow Jones is up by 31.12 points, a 0.1 percent increase, landing at 42,575.34. The Nasdaq has climbed by 65.72 points or 0.3 percent, reaching 19,376.52, and the S&P 500 is up by 13.34 points or 0.2 percent, settling at 5,894.97.
The early rally on Wall Street was driven by traders seeking to purchase stocks at lowered values after the significant downturn that concluded 2024.
Both the S&P 500 and the Nasdaq experienced four consecutive sessions of decline, with the tech-centric Nasdaq ending New Year's Eve at its lowest closing level in a month.
However, this buying interest diminished quickly after trading began. A Labor Department report indicating an unexpected drop in weekly jobless claims seemed to support the Federal Reserve's cautious strategy in reducing interest rates.
According to the report, initial jobless claims fell to 211,000 in the week ending December 28th, a reduction of 9,000 from the prior week's revised figure of 220,000.
This decline surprised economists, who had anticipated a slight rise in jobless claims to 222,000, up from the originally reported 219,000 for the preceding week.
With this unexpected dip, jobless claims have hit their lowest level since they were recorded at 209,000 during the week ending April 27, 2024.
"This data reflects a labor market robust enough for the Federal Reserve to undertake rate cuts more cautiously in 2025," commented Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. She further noted, "Our projection is for three rate cuts this year, although after the mid-December FOMC meeting, there is a risk of fewer cuts."
The ensuing market volatility may be attributed to lower-than-average trading volume, as many traders were still absent following the New Year's Day holiday.
**Sector News**
While most major sectors are seeing only slight movements, gold stocks have surged, driving the NYSE Arca Gold Bugs Index up by 4.2 percent.
This rally in gold stocks is fueled by a rise in the price of the precious metal, with gold for February delivery soaring by $26 to $2,667 per ounce.
Additionally, a spike in crude oil prices has bolstered oil producer stocks, as seen in the 1.5 percent gain of the NYSE Arca Oil Index.
Semiconductor stocks are also performing well, leading to a 1.4 percent increase in the Philadelphia Semiconductor Index.
**Other Markets**
In international markets, the Asia-Pacific region experienced mixed results on Thursday. China's Shanghai Composite Index and Hong Kong's Hang Seng Index dropped by 2.7 percent and 2.2 percent, respectively, while Australia's S&P/ASX 200 Index rose by 0.5 percent.
Conversely, European markets have trended upward. The U.K.'s FTSE 100 Index surged by 1.0 percent, Germany's DAX Index rose by 0.3 percent, and France's CAC 40 Index slightly surpassed the breakeven point.
In the bond market, treasuries have retracted near breakeven after an early rise. Consequently, the yield on the benchmark ten-year note, which inversely correlates with price, has decreased by less than a basis point to 4.571 percent.
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