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Dow set to add modestly to record climb after weekly jobless claims hits 4-month low

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Stock-index futures traded higher Thursday, signaling further gains for the Dow Jones Industrial Average a day after the blue-chip gauge closed at an all-time high.

Markets kept a grip on early gains after a weekly report on Americans seeking unemployment benefits came in lower than expected and fell to the lowest level since early November, supporting hope that the labor market is starting to turn a corner amid COVID-19 vaccine distributions and fiscal aid packages.

Investors were also parsing a monetary policy update from the European Central Bank a week ahead of the Federal Reserve’s gathering.

What are major indexes doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    +0.30%

    were up 90 points, or 0.3%, to 32,369.

  • S&P 500 futures
    ES00,
    +0.62%

    were up 24.50 points, or 0.6%, at 3,921.

  • Nasdaq-100 futures
    NQ00,
    +1.68%

    jumped 216.50 points, or 1.7%, to 12,965.75.

On Wednesday, the Dow
DJIA,
+1.46%

soared 464.28 points, or 1.5%, to close at a record 32,297.02, finishing above the 32,000 milestone for the first time. The S&P 500
SPX,
+0.60%

rose 0.6%, while the Nasdaq Composite ended marginally lower, falling less than 0.1%.

See: Dow ends above 32,000 milestone for first time. Here’s how it got there

What’s driving the market?

Weekly unemployment benefit claims dipped by 42,000 to 712,000 in the week ended March 6, the Labor Department said Thursday, the lowest level since the week ended Nov. 7. Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims would fall to a seasonally adjusted 725,000 from last week’s initial estimate of 745,000. That number was raised by 9,000 to 754,000.

The news comes as equity futures signaled the technology-heavy Nasdaq Composite could be set to outperform after a rotation in recent weeks away from growth stocks left the gauge lagging behind other major benchmarks.

Treasury yields, which have been a major catalyst for market moves in recent weeks, edged lower on Thursday as European Central Bank President Christine Lagarde said that higher market rates pose risk to financing conditions. Her statement come immediately after the ECB said that it would accelerate bond purchases under its pandemic emergency purchase program, or PEPP, while leaving the “envelope” for total purchases unchanged at €1.85 trillion.

The ECB, as expected, left its policy interest rates unchanged and said that net purchases under its asset purchase program will continue at a monthly pace of €20 billion.

Lagarde was hosting a news conference following the ECB’s policy update.

Expectations for a surge in economic growth and inflation have been stoked by passage by Congress of a $1.9 trillion package of COVID relief set to be signed into law by President Joe Biden this week.

Read: Dow ends at a record high while Nasdaq remains in correction — That hasn’t happened in 20 years

But some analysts have argued that while rising yields have coincided with the rotation away from growth stocks, they are not necessarily a cause, or a prerequisite, for the phenomenon.

Check out: Why the stock market’s big rotation can continue even without rising bond yields

“We continue to favor value stocks over growth and see prolonged high volatility in ‘Big Tech’ names with risks tilted to the downside in the short term,” said Hussein Sayed, chief market strategist at FXTM, in a note.

“Not only will higher interest rates lead to the outperformance of value companies, but it is also the optimism surrounding the economy reopening. That is not to say that all growth names will be out of favor, but investors need to be very selective and take valuations into serious consideration.”

On Wednesday, U.S. inflation data were in line with expectations, soothing fears for now of a near-term surge in consumer prices. Analysts said that could give growth shares, which are more sensitive to rising bond yields, room to bounce back.

See: Eurozone banks are showing life after 15 rough years. Will the ECB snuff out the rally?

In other economic reports, data on January job openings is due at 10 a.m. ET.

Which companies are in focus?

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