MarketView for May 2

Summary

Stocks closed about 1 percent higher on Thursday, led by tech shares, after weekly jobless claims figures pointed to improving labor market conditions a day before the closely watched monthly payroll report. The S&P ended at a record level and hit a record high intraday level of 1,598.58 earlier in the session.

The Nasdaq advanced on strength large-cap tech shares like Apple, which rose 1.4 percent to $445.52, and Amazon, up 1.7 percent to $252.55. Facebook ended the day up 5.6 percent to $28.97 after posting strong mobile advertising revenue growth in the first quarter.

The European Central Bank also lifted sentiment, putting the S&P 500 at another all-time closing high, as the ECB cut interest rates for the first time in 10 months and held out the possibility of further action if necessary to boost the euro zone economy.

The move follows Wednesday's Federal Reserve statement in which the Fed said it will continue its bond buying scheme to keep interest rates low and spur growth, and would step up purchases if needed.

Jobless claims fell sharply in the latest week, dropping to their lowest since the early days of the 2008 recession. The data follows a string of underwhelming reports, including a slow rate of growth in factory activity in the U.S. and China, which added to concerns about the pace of growth going into the April jobs report.

Visa ended the day up 5.6 percent to $175.40 a day after reporting strong quarterly results and growth in the key U.S. market. The stock earlier advanced to an all-time high. General Motors closed out the day with a gain of 3.2 percent, ending at $31.16. GM reported stronger-than-expected quarterly earnings and its loss in Europe was smaller than expected.

With 76 percent of the S&P 500 having reported, 68.5 percent have topped profit expectations, more than the 67 percent average over the past four quarters. However, only 45.6 percent have topped revenue expectations, below the 52 percent beat rate over the past year.

After the market closed, American International Group rose 2.6 percent to $43.22 after reporting its first-quarter results, while LinkedIn fell 11 percent after its results. Gilead Sciences ended the day up 4.1 percent to $52.18 after its combination hepatitis C pill proved effective in a small trial.

Volume was light, with about 6.02 billion shares changing hands on three major equity exchanges, a number that was below the daily average so far this year of about 6.36 billion shares.

Jobless Claims at 4-Year Low

The number of Americans seeking unemployment aid fell last week to seasonally adjusted number of 324,000 claims, the lowest level since January 2008. This decline points to fewer layoffs, and could possibly mean that additional hiring could be coming about.

According to the report released by the Labor Department Thursday morning, weekly applications fell by 18,000 claims, the second consecutive decline. The four-week average, a less volatile measure, fell by16,000 claims to 342,250 claims, a number that is close to a five-year low.

Applications are a proxy for layoffs. When they fall below 350,000, it is generally consistent with moderate hiring. However, layoffs are only half the equation: Companies also need to be confident enough to add workers for job growth to pick up and lower the unemployment rate. Many have held off adding new workers in recent months, possibly because of concerns about the impact of federal spending cuts and tax increases.

Economists forecast that the economy added 160,000 jobs last month. That's much better than the 88,000 added in March, but below last year's pace of nearly 185,000 per month. The unemployment rate is expected to remain unchanged at 7.6 percent.

But many have lowered their estimates this week, some as low as 120,000, after several reports suggested that slower growth is dragging down hiring. The government will release the April employment report Friday.

The spending cuts, known as sequestration and higher Social Security taxes may be making businesses more cautious about hiring. And the tax increase could slow consumer spending. The Federal Reserve said Wednesday that those policies are "restraining economic growth."

The data ahead of Friday's jobs report have been discouraging. On Wednesday, payroll provider ADP said companies added just 119,000 jobs in April. And a survey of manufacturers by the Institute for Supply Management found that a measure of employment fell sharply last month.

Many companies have been advertising more jobs but have been slow to fill them. Job openings jumped 11 percent during the 12 months that ended in February, but the number of people hired declined, according to a Labor Department report last month.

Nearly 5 million people received unemployment aid during the week ended April 13, the latest data available. That's down from nearly 5.1 million in the previous week.

Still, consumers are more optimistic that the job market is healing and will deliver higher pay later this year, according to a survey of April consumer confidence released this week. And lower gas prices could offset some of the pinch from the tax increase.