Thursday’s Mid-Day Movers: 3 Stories Driving Markets
It was a sore morning for the markets as traders woke up to gloomy economic data from around the world. However, by the afternoon markets had curbed most of their losses and were pushing for greener pastures, fueled by positive business activity.
At 2:00 p.m.: DJIA: -0.10%, S&P 500: +0.02%, NASDAQ: +0.09%.
1) The Department of Labor reported that seasonally-adjusted initial jobless claims for the week ended February 9 fell 7.3 percent to 341,000. The four-week moving average, a more stable metric that smooths out some volatility, increased about half a percent to 352,500. While the results were better than the average estimate of economists polled by Reuters, who expected claims to come in at 360,000, the report is, at best, only modestly good news.
The health of the labor market remains a primary economic concern moving through 2013, as the U-3 unemployment rate is expected to remain near 8 percent throughout the year. Initial claims have fallen fairly consistently over the past year (with a notable exception at the beginning of December), but the rate of job creation is still far below what it needs to be in order to materially reduce the unemployment rate… (Read more.)
2) European markets headed to a lower close on Thursday following data released by Eurostat that showed broad economic contraction in the fourth quarter. The statistical office of the European Union reported that fourth-quarter GDP in the euro-area 17 bloc fell by 0.6 percent, and by 0.5 percent in the EU27 bloc. In the third quarter of 2012, growth rates were -0.1 percent and +0.1 percent, respectively.
The decline is particularly concerning because economic output in major economies like France and Germany fell alongside Spain and Italy. Greece’s economic output increased 0.7 points, but that gain moves it up to -6.0 percent, the worst of any country in Europe.
3) U.S. lawmakers are re-examining tax policies related to charitable contributions as part of an effort to broaden the tax base without raising rates. Bloomberg reports that President Barack Obama is considering limiting the deductions that people in the top three tax brackets can claim for charitable contributions, suggesting that the current policy is more of a means for the wealthy to game the system than an incentive to donate to a good cause.
By 2015, as much as 50 percent of the tax benefits from deductions will go to just the top 1 percent of tax payers, while over 82 percent of the benefit will go to the top 20 percent. The initiative could gain bipartisan support, as closing loopholes to broaden the tax base could result in lower rates.