Stronger-than-expected US economic data signals resilient domestic demand and will support equity valuations
Too little corroboration in the last 3 days to call a trend (3 articles). Watching for it to gain traction.
Sources cite resilient US labor market indicators—including unexpected declines in initial unemployment claims—as evidence that domestic demand remains strong and will support equity valuations through sustained economic growth.
Stronger economic data reduces the probability of earnings downgrades and extends the runway for corporate profit growth; this supports higher price-to-earnings multiples and reduces the equity risk premium required by investors.
"Signs of strength in the US labor market are positive for economic growth and stocks after weekly initial unemployment claims unexpectedly fell -4,000 to 203,000, showing a stronger labor market than expectations of an increase to 208,000."
"Economic reports released on Thursday were better than expected. The number of Americans filing for initial jobless claims in the past week fell by -6K to 206K... Also, the U.S. Philly Fed manufacturing index unexpectedly rose to a 5-1/4-year high of 47.4 in August."
"Stocks also found support on some better-than-expected US economic news. The Aug Empire manufacturing survey general business conditions index unexpectedly rose +5.0 to a 4.5-year high of 20.6, stronger than expectations of a decline to 10.0."