The major indexes made a tidy little jump out of the gate Thursday in response to fresh, encouraging data on the employment front a day after a weak August ADP payrolls reading ruffled some feathers.
The Labor Department reported that jobless-benefits claims for the week ended Aug. 28 dipped to 340,000 the lowest tally since March 2020, and 5,000 claims fewer than what economists expected brighter news than yesterday's weak payroll report from payroll firm ADP.
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U.S. crude oil futures rose 2.0% in response, to $69.99 per barrel, helping ConocoPhillips (COP, +3.6%), Exxon Mobil (XOM, +2.4%) and others benefited most from this early pop.
Stocks, however, broadly finished below their intraday highs. The S&P 500 (+0.3% to 4,536) and NasdaqComposite (+0.1% to 15,331) both managed to scratch out fresh highs. The Dow Jones Industrial Average closed 0.4% higher to 35,443, and the small-cap Russell 2000 (+0.7% to 2,304)! recorded its third consecutive improvement.
From here, attention shifts to tomorrow morning's August jobs report. “It feels like the market is set up for a 'Goldilocks' number after yesterday's ADP miss. ADP has not been a good indicator for the official data over the past year,” says Michael Reinking, senior market strategist for the New York Stock Exchange. “Given the positioning, it feels like there is a little more risk if the number were to surprise to the upside. If nonfarm payrolls are above the estimate (~750k), this could very well push the Fed to move in September. Anything below 500k would provide some additional cover.”
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Steve Sosnick, chief strategist at Interactive Brokers, provides additional insight into why the ADP report might not be indicative of what's to come tomorrow.
“It would be logical to think ADP payrolls offer an excellent guide to the nonfarm payrollnumbers that follow.Unfortunately, the data shows otherwise,” he says, noting that the correlation “stinks” over the past 20 years. “I believe that most of the differences stem from the different types of data that are collected.ADP data is collected from their customers, who skew larger, while (Bureau of Labor Statistics) data specifically attempts to reach smaller businesses.”
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Other news in the stock market today:
Healthcare: The Market's Steady Eddie Sector This Year
Healthcare stocks keep threading the needle in 2021.
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The sector has delivered a 20.5% return so far this year smack-dab in the middle of the market's 11 sectors, and just 28 basis points behind the S&P 500 itself, with exceedingly low volatility along the way. (A basis point is one one-hundredth of a percentage point.)
That performance illustratesthe sector's two-pronged appeal: the potential for growth thanks to long-term spending trends as well as the development of blockbuster pharmaceutic! al and bi! otechnology treatments, and the defensive, income-minded production of established pharma firms whose products are a necessary expenditure for millions of Americans.
While you certainly have your pick of the litter with individual stocks, you might be among the investors who would prefer to simply grab a large portion of the sector and call it a day. We've explored several ways you can do thatwith top-notch healthcare exchange-traded funds (ETFs), which allow investors to get exactly the type of sector exposure they want.
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