Markets climb following weekly jobless-claims data

Dow rose 189, advancers over decliners 5-2 & NAZ rose 26.  The MLP index added 1+ to the 285s & the REIT index went up 5 to the 368s.  Junk bond funds inched higher & Treasuries were pretty much flat (more below).  Oil crawled up pennies in the 89s & gold gained 13 to 2336. 

AMJ (Alerian MLP Index tracking fund)

Initial filings for unemployment benefits have hit their highest level since late Aug 2023, a potential sign that an otherwise robust labor market is changing.  Jobless claims totaled a seasonally adjusted 231K last week, up 22K from the previous period & higher than the estimate for 214K, the Labor Dept reported.  The increase in claims follows a string of mostly strong hiring reports, though hiring in Apr was light compared with expectations.  Also, job openings have been declining amid expectations that the labor market is likely to slow thru the year.  The report also showed that continuing claims, which run a week behind, increased to 1.78M, up 17K from the previous week.  The 4-week moving average of claims, which helps smooth out weekly volatility in numbers, increased to 215K, up 4750 from the previous week.  Excluding seasonal adjustments, claims totaled 209K, up 10.4% from the previous week.  New York alone saw an increase of more than 10K, accounting for more than ½ the total rise.  “A low number of claims had become almost monotonous, and while this surprising spike could well be a blip, we should expect more volatility and a trend toward higher claims as the labor market normalizes,” said Robert Frick, corp economist at Navy Federal Credit Union.

Weekly jobless claims jump to 231,000, the highest since August

McDonald's (MCD),  a Dow stock & Dividend Aristocrat, US franchisees will start paying into a digital marketing fund next year as the fast-food giant looks to expand its booming digital business.  The change is meant to modernize the company's marketing strategy & widen its competitive advantage, according to the memo, which was written by US Customer Experience Officer Tariq Hassan & Chief Information Officer Whitney McGinnis.  The memo also said that MCD's plans to invest hundreds of Ms of $s over the next couple of years to improve its loyalty program & add ordering channels, including placing web orders without downloading an app, which should also bolster its digital business.  Loyalty program members accounted for more than $6B in system-wide sales globally during MCD's first qtr.  In Dec, MCD's said it aims to reach 100M loyalty program members by 2027.  For now, the franchisor is recommending that franchisees pay for the new fund using their existing marketing contribution, which requires that they spend at least 4% of gross sales, according to the memo.  As a result, the new approach will likely lead MCD's to cut back on legacy marketing tools, such as TV commercials, & focus on areas that tangibly lead to higher sales.  The stock fell 65¢.

McDonald’s is betting on its mobile business with new franchisee digital marketing fund

Treasury yields were mostly higher as investors considered remarks from Federal Reserve officials, scanning them for hints about the interest rate outlook.  The yield on the 10-year Treasury was up nearly 2 basis points at 4.502% & the 2-year Treasury yield was last at 4.83% after losing more than 1 basis point.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Investors looked to a series of remarks from Federal Reserve officials as they considered what the path ahead for monetary policy could look like.  Uncertainty about when, if & how often, rates will be cut this year has been persistent in recent weeks.  Boston Fed Pres Susan Collins yesterday became the latest central bank policymaker to indicate that interest rates will likely be steady until inflation is clearly moving toward the Fed's 2% target range.  Collins' comments echoed those made by Minneapolis Fed Pres Neel Kashkari & Richmond Fed Pres Tom Barkin earlier in the week.  They were also all broadly in line with the guidance issued by the Fed after its latest meeting earlier this month.

10-year Treasury yield rises as investors consider remarks from Fed officials

Dow began the day trading around even, then the bulls arrived & gave it a nice gain.  It's about 600 under its record highs in late Mar.  However while rising jobless claims data is good for rate cut prospects, it also suggests economic growth is slowing.  That could make for choppy times in the stock market going forward.

Dow Jones Industrials