Treasury yields fall as jobless data fuel Fed bets

Treasuries climbed after the latest jobless claims added to evidence the labor market is cooling, paving the way for the Federal Reserve to cut rates this year.

Two-year yields, which are more sensitive to imminent Fed moves, dropped three basis points to 4.8%. Stock futures rebounded from session lows. The pound fell on signals the Bank of England is moving closer to easing monetary policy. Bitcoin is flirting with five straight days of declines, which would be the longest such losing run since October.

Initial applications for US unemployment benefits rose last week to 231,000 - the highest level since August. The median forecast in a Bloomberg survey of economists called for 212,000 applications.

The S&P 500 already is beyond the average Wall Street forecast for year-end 2024, so investors understandably are wondering how much more room there is to run. For Leuthold Group’s Doug Ramsey, another 10% gain isn’t out of the question, at least statistically.

He analyzed 80 years of historical data on bull-market rallies, focusing on those that happened when unemployment was this low - below 4% - and the economic cycle this mature. Ramsey zoomed in on two periods that met those criteria - one when the S&P 500 posted its longest bull-market advance, the other when it clocked the biggest gain. The former came in a 26-month advance during the 1960s, while the latter was a 60% rally leading into the dot-com bust at the turn of the century.

If the current rally meets the prior records for length and height, the S&P 500 ends the year at 5,705.

Corporate Highlights:

—Arm Holdings Plc shares tumbled after the chip designer gave a lukewarm revenue forecast for the fiscal year, raising concerns that the tech industry’s artificial intelligence spending spree is slowing.

—Google parent Alphabet Inc. has been progressing in talks to acquire marketing software provider HubSpot Inc., according to people familiar with the matter.

—A 30-year-old Boeing Co. 737 skidded off the runway in the Senegalese capital of Dakar, injuring 10 people, according to the country’s transport minister.

—Airbnb Inc. sank after the home-rental company gave lackluster guidance for a second straight quarter, indicating that growth in travel spending will slow ahead of the peak summer season.

—Warner Bros. Discovery Inc. Chief Executive Officer David Zaslav has ordered his lieutenants to find additional opportunities for cost-cutting in order to hit financial targets for the next couple years, people with knowledge of the matter said.

—Robinhood Markets Inc. posted its second straight quarterly profit Wednesday as higher interest rates and cryptocurrency trading fueled revenue growth.

—Duolingo Inc. shares slumped after the education software provider’s quarterly report showed it had gained new users at the slowest rate since the third quarter of 2022.

—Brookfield Corp. posted a 5% increase in distributable earnings, beating analysts’ estimates, as higher profits in its insurance business helped offset a soft patch for Brookfield Asset Management.

—Banco Bilbao Vizcaya Argentaria SA took an €11.5 billion ($12.4 billion) bid for Banco de Sabadell SA directly to shareholders, a rare hostile move that the Spanish government said it opposed on concerns over job cuts and reduced competition.

Key events this week:

—UK industrial production, GDP, Friday

—ECB publishes account of April policy meeting, Friday

—BOE Chief Economist Huw Pill speaks, Friday

—US University of Michigan consumer sentiment, Friday

—Chicago Fed President Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

—S&P 500 futures were little changed as of 8:41 a.m. New York time

—Nasdaq 100 futures were little changed

—Futures on the Dow Jones Industrial Average fell 0.1%

—The Stoxx Europe 600 rose 0.2%

—The MSCI World index was little changed

Currencies

—The Bloomberg Dollar Spot Index was little changed

—The euro was little changed at $1.0756

—The British pound was little changed at $1.2507

—The Japanese yen was little changed at 155.64 per dollar

Cryptocurrencies

—Bitcoin fell 0.3% to $61,391.62

—Ether rose 1.2% to $2,985.68

Bonds

—The yield on 10-year Treasuries declined two basis points to 4.48%

—Germany’s 10-year yield advanced one basis point to 2.47%

—Britain’s 10-year yield declined one basis point to 4.13%

Commodities

—West Texas Intermediate crude rose 0.7% to $79.54 a barrel

—Spot gold rose 0.8% to $2,327.72 an ounce