Stocks Mixed Thursday as Investors Digest Jobless Claims

The economy is in a strange spot. Stocks are mixed Thusday as investors weigh new jobless claims data.

There are only mixed signals in the market on Thursday. On the one hand, jobless claims in the US rose last week, but still fell in line with consensus economists’ expectations. On the other hand, the once-struggling Coinbase is surging thanks to an influx of optimistic investors. Meme stocks are roaring back, but the economy as a whole looks shaky. 

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This pattern extended to the stock market, too. The three main indexes are trading very mixed this morning, with the S&P 500 dropping 0.2% and the Dow Jones Industrial Average losing 0.3%. The Nasdaq Composite, on the other hand, jumped by almost 0.2%, owing to strong risk-tasking enthusiasm from some investors. It’s difficult to say what these patterns mean for the economy right now, as investors and regulators seem to have differing opinions about what direction the market is heading. 

Read More: Check out the latest Mind Your Dollars stock and financial news.

The Federal Reserve has signaled its intention to continue with aggressive rate hikes to curtail inflation. Some economists say the US economy needs a recession for prices to stabilize. Others say talks of a recession are unfounded, and that supply and demand are equalizing. The only signals are mixed signals.

Economists Weigh Job Data

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Economists are sifting through the weekly jobs report, trying to make some sense of the direction of the economy. Initial jobless claims topped 260,000 last week, the highest level since November. Experts say this is indicative of a major shift in the US labor market. Notably, consensus economists expect tomorrow’s report from the Department of Labor Statistics to show the US added 258,000 new jobs in July, the lowest total since December 2020.

Still, some experts say that this isn’t as bad as it sounds. “The labor market remains in good shape as the summer quarter progresses but the rise in initial claims since early April is a cold breeze blowing at the hot labor market this summer,” explains Stuart Hoffman, PNC Financial Services’ senior economic advisor. There’s another factor to consider in this data, too: the Federal Reserve.

The Fed is closely monitoring the economy, including job reports, to figure out how much it needs to do to get inflation under control. If demand stays red-hot and the labor market remains tight, the Fed will have no choice but to continue hiking interest rates and tightening its financial policies. This is bad news for investors, but it’s necessary to get the US dollar back under control.

Experts Notice This Unusual Pattern

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The amount of mixed signals in the market has caught the attention of economists, too. The Institute for Supply Management released its survey on business activity Wednesday, showing that even large-cap businesses are feeling the pull of the market’s aimlessness. Business activity expanded at a faster pace in July than expected, but consumer sentiment is still tanking in the US.

“Despite increased concern of a downturn, there was little sign of a slowdown in the details of the report,” Wells Fargo economists led by Tim Quinlan stated on Wednesday. “The staying power of consumers will eventually run out, but the July ISM services data further support our view that service-sector activity will hold up well in the near-term.” But this doesn’t show the full picture. Some data sets showed the economy slowing in July, and the all-important GDP numbers have shown negative growth for the past two quarters.

Two consecutive quarters of negative growth fits the informal criteria for a recession, leaving the economy in a strange spot. Businesses “[c]an feel the economy weakening,” one respondent told the ISM. “Clients are making appropriate moves in anticipation of a recession.”

Coinbase Shares Roar Back

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Coinbase’s share price took a beating over the summer as one of the worst crypto downturns on record gripped the entire industry. Now, with an investment from BlackRock Capital and enthusiasm from “meme stock” investors, Coinbase’s shares have jumped nearly 40%. BlackRock apparently sees a chance to capitalize on the downturn in crypto and turn it into an investment opportunity for its institutional investors.

“Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets,” explained Joseph Chalom, BlackRock’s global head of strategic ecosystem partnerships. The agreement will let investors “manage their bitcoin exposures directly in their existing portfolio management and trading workflows,” Chalom explained. 

This is good news for the flagging crypto industry. The past eight months have been brutal for standards like Ethereum and Bitcoin, which have lost billions of dollars in market capitalization since the latest downturn started. The news that an influx of institutional capital could prop up the industry is enough to send some enthusiastic investors pouring into Coinbase stock. Could Bitcoin be setting itself up for a similar comeback? It’s certainly bounced back from similar scenarios in the past.

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