Mar 6 - Summary: A drop in jobless claims sent the S&P 500 to its second record close in a row; Atlanta Fed President sees taper staying on course; Retailers see hope in end-of-February sales traffic. Conway G. Gittens reports.
The S&P 500 closes at a record high as investors bet on improving labor trends. The tech-heavy Nasdaq was a laggard but stocks crossed the finished line higher nonetheless. Why the optimism? Applications for unemployment benefits tumbled to the lowest this year. Investors interpret the fall as a sign the labor market is shedding the weather impact of January and February and returning to more normal levels. The claims data, however, fell outside the week used to compile February's jobs report, which is due on Friday. Separately, layoff announcements were down month-to-month in February and down compared to the same time the year before. Robert Brusca, chief economist at Fact and Opinion Economics, is not as optimistic on the labor market as others. SOUNDBITE: ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS (ENGLISH) SAYING: "The unemployment rate has been coming down, even though job growth hasn't materially accelerated. A lot of this has been generated by labor force participation rates, and there is just a big argument among economists how much of this is a long-term trend with the aging population, and how much of it is discouraged workers not able to find a job in a difficult, a still difficult economy over an extended period of time." But that doesn't worry some at the Federal Reserve, like Atlanta Fed President Dennis Lockhart. SOUNDBITE: DENNIS LOCKHART, PRESIDENT, ATLANTA FEDERAL RESERVE (ENGLISH) SAYING: "In my mind, unless we really fall off the track in the economy pretty dramatically, I think the tapering program should precede and I doubt seriously we are going to see disastrous numbers, so in my thinking the tapering program should continue." Meanwhile, retailers provided a reason to be hopeful. Traffic picked up at the end of last month as consumers ventured out after frigid temperatures kept them home earlier in the month. Sales at Costco locations opened at least a year rose three percent, putting the wholesale retailer on the road to rebound. Deep discounting during the holiday period led to a much steeper-than-expected fall in quarterly profits. In Europe, European Central Bank President Mario Draghi strays little from the path, even though inflation has stumbled below his one percent comfort zone. Concerns about policy left stock markets in the region barely higher.