The stock market's losing streak finally ended after five straight down days amid some economic data and Fed-speak.
First, the scoreboard:
- Dow: 15,328.3, +55.0 +0.3 %
- S&P 500: 1,698.6, +5.9, +0.3%
- NASDAQ: 3,787.4, +26.3, +0.7%
And now the top stories:
- We got mixed news on the U.S. labor market today.
- First, we learned that initial unemployment claims plunged to 305,000 from 309,000 last week. This was much lower than the 325,000 expected by economists. It also brought the four-week moving average down to 308,000, the lowest level since June 2007.
- "We believe the true underlying trend is closer to 320,000," said Deutsche Bank's Joseph LaVorgna. "Still, this would represent the lowest reading since Q4 2007, so based on these figures the labor market is getting better, albeit at a modest pace."
- Second, we got some interesting anecdotes from the Kansas City Fed's manufacturing survey. "Worker shortages remained a problem at many firms," said KC Fed economist Chad Wilkerson. Among the anecdotes: " Our starting wage has dropped because we are having to train people that come to us with no experience or skill." " Our industry has lost labor force to the oil and gas industry, which is not really paying more hourly but is giving a lot more overtime. " " We keep hearing the economy is getting better, but we have not seen an improvement.”
- Federal Reserve Governor Jeremy Stein proposed a new rule to guide the reduction of easy monetary policy. "My personal preference would be to make future step-downs a completely deterministic function of a labor market indicator, such as the unemployment rate or cumulative payroll growth over some period," said Stein. "For example, one could cut monthly purchases [of Treasury securities and mortgage-backed securities] by a set amount for each further 10 basis point (0.1%) decline in the unemployment rate."
- In a separate speech, Minneapolis Fed President Narayana Kocherlakota suggested that the Fed might actually have to provide more stimulus in its efforts to get unemployment down. "The Committee has to stick to its formulated approach—that is, it must do whatever it takes to achieve its communicated goal," said Kocherlakota. Doing whatever it takes could even mean ignoring concerns about bubbles, he added. "It may not be easy to stick to this path. But I anticipate that the benefits of doing so, in terms of employment gains, will be significant."
- Don't Miss: MORGAN STANLEY: Here Are 40 Stocks That Should Grow No Matter What »
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