U.S. equity markets inched higher Thursday as new unemployment claims declined from the week before and Federal Reserve Chairman Jerome Powell outlined a policy shift intended to compensate for long periods of low interest rates.
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The Dow Jones Industrial Average climbed 215 points, or 0.76%, while the S&P 500 was higher by 0.3% and the Nasdaq Composite was little changed.
Jobless claims of 1.006 million for the week through Aug. 22 were 98,000 lower than the week before and in line with analysts' projections. Still, they took the total since coronavirus lockdowns began to 58.4 million, nearly 37% of the entire U.S. workforce.
That may worsen if Delta and American airlines follow through on plans to lay off 21,000 more workers barring federal aid, though the White House is working to prevent that.
In economic news, Federal Reserve Chairman Jerome Powell said the central bank will modify its strategy for achieving 2% inflation, the level needed to maintain stable economic growth, to allow wider expansion than that after periods of below-target performance.
The adjustment accounts for some of the stresses of sustained low interest rates, the Fed explained. The central bank cut rates to nearly zero earlier this year after leaving them at that level for roughly seven years following the financial crisis. Economists have said low rates, which buoy spending in the short term, also hurt retirement savings over time.
Bank stocks rallied following the Fed's announcement.
Meanwhile, West Texas Intermediate crude oil dipped 58 cents at $42.81 per barrel after Hurricane Laura made landfall as a Category 4 storm in Cameron, Louisiana. Oil majors Exxon Mobil Corp. and Chevron Corp. were also weaker.
Elsewhere, Abbott Laboratories received Food and Drug Administration approval for a $5 COVID-19 test that provides results in 15 minutes. The tests, which are 97% accurate, will begin shipping in September.
Under Armour Inc. was sued for breach of contract by the University of California Los Angeles, which is seeking more than $200 million after the sports apparel maker terminated their 15-year, $280 million deal just four years in. Under Armour cited force majeure, a provision covering unpredictable circumstances, and the university’s struggles in football and basketball as reasons for ending the pact.
Looking at earnings, Tiffany & Co. reported mixed quarterly results helped by a rebound in its China business. Stores open at least 12 months saw sales slide 24% from a year ago.
In retail Abercrombie & Fitch Co.'s digital sales rose 56% in the three months through Aug. 1, even as the coronavirus store closures dragged overall revenue down to $698 million.
Meanwhile, Chinese electric-car maker XPeng Inc. is set to raise $1.5 billion in an initial public offering. Shares of the Tesla Inc. rival will trade on the New York Stock Exchange under the ticker XPEV.
In Europe, France’s CAC dropped 0.41%, Germany’s DAX slid 0.57% and Britain’s FTSE slipped 0.12%.
Asian markets ended mixed, with China’s Shanghai Composite adding 0.61% while Hong Kong’s Hang Seng and Japan’s Nikkei fell 0.83% and 0.35%, respectively.