Stock Indexes Decline as Lowest Average Claims in 43 Years Gives Fed Rate-Hike Ammunition

Stock indexes declined after the average number of Americans filing jobless claims fell to the lowest level in almost 43 years, giving the Federal Reserve more ammunition to raise interest rates before the end of the year.

The rolling four-week average of jobless claims dropped to 249,250, the lowest since November 1973, the Labor Department said in a report on Thursday. Claims were unchanged last week at 246,000, according to the report.

Conversely, China’s trade surplus fell by nearly 20% in September as exports plunged 10% and imports were down 1.9%, both significantly worse than expectations.

The Federal Open Markets Committee, which is charged with deciding whether to raise interest rates, is now torn between strong US employment data and ongoing global economic woes. The FOMC in December raised its federal funds rate to 0.25% to 0.5% and said at the time it planned to raise interest four times in 2016. The global economy faltered at the beginning of the year, putting the Fed’s plans on hold.

US import prices were up an expected 0.1% in September, while export prices increased by 0.3%, beating estimates for a gain of 0.1%.

The Dow Jones Industrial Average fell 0.8%, the Standard & Poor’s 500 lost 0.9% and the Nasdaq Composite dropped 1.1%.

Globally, the FTSE lost 1.1%, the Nikkei declined 0.7% and the Shanghai Composite rose 0.1%.

By Bryan Smith