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Signs of further recovery in the jobs market have cheered investors on Wall Street today, helping to offset nerves that lack of progress in budget talks in Washington may lead to a shutdown of the US federal government next week.
By early afternoon in New York, the Dow had gained 0.41% or 62 points to 15, 335 and the broader S&P 500 index advanced 0.38% to stand at the cusp of the key 1700 level. At these levels the S&P 500 is on track to break out of it worst losing streak of the year.
Contributing to those losses seen for the last five trading days in a row has been anxiety over how the proximity of the 1 October deadline for current spending authority for the US federal government. The Republican-controlled House of Representatives and the Democrat-controlled Senate have been unable to strike a deal so far for a budget for the next fiscal year, or agree on any stop-gap measures, and we are left with very few working days before the deadline.
Speaker of the House of Representatives John Boehner said today that he did not expect a shutdown on Tuesday, though.
The third estimate for second-quarter US GDP came in today at 2.5%, unchanged from the second estimate, although the GDP price index was revised down from 0.8% to 0.6%. This doesn’t particularly change the complexion of the Fed’s deliberations on whether to reduce its stimulus, although cooling inflation looks like it will be a factor in the debate again.
Lower-than-expected jobless claims for last week suggest the labour market continues to steadily improve; new claims fell 5000 to 305,000. The prior week was revised up by just 1000, which is a good result considering some major revisions were feared as part of the fallout from the processing issues earlier in the month in California and Nevada. The four-week moving average slid to 308,000, which is a post-recession low.
The US dollar has advanced against most major currencies today on the back of the upbeat jobless claims report, gaining 0.5% against the yen, while cable fell 0.38% and the US dollar index rose 0.3%.