By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Thursday after a surge in initial jobless claims tempered fears of aggressive interest rate hikes by the Federal Reserve.
By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was up 151 points, or 0.4% at 35,179 points, recouping around half of what it lost in Wednesday's selloff. The S&P 500 was likewise up 0.5% and the NASDAQ Composite was up 1.0%.
Earlier, the Labor Department had said that initial jobless claims rose to a three-month high of 286,000, well above forecasts, against a backdrop of widespread disruption to the service sector in particular from the wave of Omicron-variant Covid-19. With most of the federal government's support for those hit by the pandemic now having been withdrawn, any rise in joblessness is more likely to have an immediate impact on final demand in the economy, as well as redressing the balance in a tight labor market.
"The rise in claims reflects both an increase in layoffs due to the surge in Covid cases as well as an added boost from large seasonal adjustment factors," said Oxford Economics' Nancy Vanden Houten in a note to clients. She added, however, that she expects the weekly number to trend around 200,000 again, once the Omicron wave passes. There are tentative signs that that may already have happened, with the seven-day average of new infections having fallen around 6% from its peak last week.
On a heavy day for earnings, United Airlines (NASDAQ:UAL) stock stood out with a 2.2% fall after it warned that it wouldn't return to pre-pandemic levels of capacity until next year at the earliest. Rival American Airlines Group (NASDAQ:AAL) stock also suffered as it reported a $931 million net loss for the quarter and spoke in only vague terms about returning to profitability in its quarterly report.
If the travel sector suffered from negative pandemic-related newsflow, freight services had no such problems. Union Pacific (NYSE:UNP) stock and CSX (NASDAQ:CSX) stock both rose 1.7% after the railroad operators both posted strong quarters, UPR's performance bolstered in particular by shipments of industrial materials and lumber.
Lumber prices have surged again as housing starts have weathered last year's spike in prices. However, there were signs earlier that rising mortgage rates are starting to have an impact on the housing market. Existing home sales fell well short of expectations in December.
Elsewhere, SoFi Technologies (NASDAQ:SOFI) stock rose another 9.8%, continuing to receive inflows after getting regulatory approval to become a bank. Meanwhile, Signet Jewelers (NYSE:SIG) stock rose 2.2% after the company reported a strong fourth-quarter that allowed it to expand its buyback program.