US weekly jobless claims drop calms market fears

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Aug 8 - The number of Americans filing new applications for unemployment benefits fell more than expected last week, calming fears the labor market was unraveling and reinforcing that a gradual softening remains intact.

U.S. stocks gained following the release, while benchmark Treasury yields rose back above 4%. The U.S. dollar , also strengthened against a basket of currencies. Claims fell sharply in Michigan and Missouri, states with a heavy presence of motor vehicle assembly plants which saw claims rise the prior week. Auto makers typically idle assembly lines in July to retool for new models.

However, the government's monthly nonfarm payrolls report last Friday showed job gains slowed markedly in July and the unemployment rate rose to 4.3%, alarming markets at that point that the labor market may be deteriorating at a pace that would call for strong action from the Fed.

 

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