Thursday’s Mid-Day Movers: 3 Stories Driving Markets

The major stocks were trading down Thursday afternoon following an unexpectedly optimistic jobless claims report. As of 12 p.m.:

DIJA: -0.05% to 15299.77 S&P 500: -0.34% to 1649.65 NASDAQ: -0.15% to 3457.95
Gold: +2.06% to 76.13 Oil: -0.73% to 21.72 U.S. 10-Year: +0.79% to 20.42

Here are three stories helping shape the markets Thursday afternoon:

1. The Housing Market Receives Another Impressive Surprise: The Fed-induced recovery in the real estate market continues to boost some areas of the economy, as new single-family home sales in the United States rose more than expected in April.

On Thursday, the Commerce Department reported that purchases of new homes, measured by contracts signed, increased 2.3 percent to a seasonally adjusted 454,000-unit annual pace last month, compared to the revised March rate of 444,000 units. This is the second best level since July 2008. Home sales are up 29.0 percent compared to April 2012. However, as the chart below shows, the real estate market is still well below its glory days… (Read more.)

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2. Do These Unemployment Figures Support Bernanke’s Concerns? After the Labor Department reported last week that the initial claims for unemployment benefits hit their highest level since last November, the labor market was put under the spotlight, with analysts viewing the increase as a warning sign. But, following the end of recession in 2009, unemployment in the United States suffered numerous setbacks that slowed recovery, and last week’s spike appears to be one of them. On Thursday, government data showed that fewer Americans filed applications for unemployment benefits, an indication that the job market can sustain its recent gains despite the jump reported last week.

For the week ended May 18, jobless claims declined by 23,000 to 340,000, below analysts’ expectations for a decrease of 28,000… (Read more.)

3. Will Central Bank Stimulus Keep Manufacturing Alive? Federal Reserve Chairman Ben Bernanke’s testimony on the U.S. economic outlook on Wednesday took global markets by storm. In the wake of the financial crisis, equity markets have become addicted to central bank stimulus and even the slightest indication that the Fed will tighten the monetary drip will send tremors of selling pressure through the exchanges.

This was abundantly evident on Thursday, when Japan’s Nikkei index declined 7.32 percent. The plunge is a testament to the dangers of how hot money can inflate stock prices and how sensitive market sentiment really is to monetary policy… (Read more.)

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