Rising US Unemployment Claims Drag Down Wall Street

Thursday’s unemployment report in the US was not only worse than expected, but also even worse than last week’s figure.

This weekly data is watched by the main analysts and market players because it measures the health of the labour market in the US. The report in question is published by the Department of Labor and records the number of people who are starting the application process for receiving unemployment benefits.

Yesterday, we learnt that 861,000 people applied for some type of unemployment assistance from the authorities during the last week. This figure compares badly with 848,000 the previous week, made worse by the fact that market consensus had expected an improved figure of around 765,000.

This data, together with the increase in US bond yields, caused Wall Street to close with declines of 0.38%, 0.44% and 0.72% in the Dow Jones, SP500 and Nasdaq indices respectively, thus leading these indices to seek their support levels around the 18 session average.

Rises in US bond yields led directly to a sell-off of the Nasdaq index, as they largely affect sentiment towards large technology stocks.

Technically, this week the Nasdaq is making a bearish candle after recording new all time highs last Tuesday. This has led it to look for its support level where its 18 session moving average meets the resistance level from the previous highs, thus reaching the 23.6% Fibonacci retracement level of the last upward impulse.

Despite this, the trend remains bullish and these recent pullbacks are helping to alleviate the accumulated overbought conditions that we can see in the stochastic indicator. Even so, we will have to be vigilant in the short term and see if the price is able to hold this support level or, on the contrary, it continues to decline towards its 40 session moving average around the 50% Fibonacci retracement level.

Depicted: Admiral Markets MetaTrader 5 - NQ100 Daily Chart. Date Range: 12 November 2019 - 19 February 2021. Date Captured: 19 February 2021. Past performance is not necessarily an indication of future performance.

Evolution of the last five years:

• 2020: 43.64%
• 2019: 35.23%
• 2018: -3.88%
• 2017: 28,24%
• 2016: 7.50%

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