US stocks push higher as eurozone slips into recession

Wall Street stocks shook off recent hesitancy and rallied Thursday, reflecting better sentiment on the US economy and a consensus view that the Federal Reserve will not hike interest rates next week.

The gains came as European equities also advanced despite data showing the bloc slipped into a recession following negative growth in the first quarter.

Analysts see strength in US industrial shares as evidence of a widening stock market rally as futures markets bet on a Fed interest rate pause next week and some analysts see a smaller chance of a US recession in 2023.

“We’re seeing a broadening of the rally,” said Art Hogan, an analyst at B. Riley Financial, who also sees rising investor confidence that the Fed will not hike rates after its subsequent 2023 meetings.

Fresh data on the US labor market showed first-time claims for unemployment benefits rose modestly to 261,000 last week, the highest level for more than a year and a half. The data fueled “speculation that the labor market is finally starting to respond to the impact of past rate hikes and spike in inflation,” said market analyst Fawad Razaqzada at City Index.

Major US indices all finished solidly higher, led by the Nasdaq, which jumped one per cent. In another sign of shifting expectations on the Fed, the dollar retreated against the euro and other major currencies.

Meanwhile, the European Union’s statistical agency, Eurostat, revised downward an earlier forecast that had predicted slight growth, estimating first-quarter contraction of 0.1 per cent.