Stock Market Today: Stocks Buck Surprise Jump in Jobless Claims

The major stock indexes improved for a third consecutive session, logging mild (but pleasantly surprising) gains Thursday in the face of a disappointing jump in weekly unemployment filings.

The Labor Department reported that first-time claims for jobless benefits jumped to 419,000 for the week ended July 17 – an increase of 51,000 filings and far more than economists' forecast for 350,000.

However, Anu Gaggar, senior global investment analyst for Commonwealth Financial Network, says the news isn't as bad as the headline figure suggests.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

"We need to filter the noise in the data points and not lose sight of the big picture, which is that the trend line continues to head lower," she says. "There has been some distortion in data and in consensus expectations around automakers' annual retooling shutdowns that will work its way through the system in the upcoming weeks."

Although investors initially reacted with early selling, stocks gradually recovered over the course of the day. The Nasdaq Composite (+0.4% to 14,684), S&P 500 (+0.2% to 4,367) and Dow (up marginally to 34,823) all logged modest gains, helped by the likes of mega-caps Apple (AAPL (opens in new tab), +1.0%) and Microsoft (MSFT (opens in new tab), +1.7%).

The industrial average also benefited from a boost in shares of chemical giant Dow Inc. (DOW (opens in new tab), +1.3%), which reported Street-beating earnings and sales.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Small caps weren't so fortunate. The Russell 2000, which had outperformed the major indexes the past two sessions, dropped 1.6% to 2,199.

Other action in the stock market today:

• Amid the onslaught of earnings reports hitting the Street, Netgear (NTGR (opens in new tab)) was a notable loser in the wake of its results, sinking 9.5%. In its second quarter, the computer networking company generated adjusted earnings of 66 cents per share, well below what analysts were expecting. Revenue of $308.8 million also fell short of the consensus estimate. In addition, NTGR lowered its current-quarter revenue and operating margin forecasts.
• On the flipside, foam clog maker Crocs (CROX (opens in new tab)) surged 10.0% in the wake of its second-quarter earnings results. CROX reported better-than-expected adjusted earnings of $2.23 per share on record revenue of $640.8 million. The company also raised its full-year revenue guidance, now expecting annual sales growth of 60% to 65%.
• U.S. crude oil futures rose for a third straight day, climbing 2.3% to settle at $71.91 per barrel.
• Gold futures edged up 0.1% to $1,805.40 an ounce.
• The CBOE Volatility Index (VIX) dipped slid 1.2% to 17.69.
• Bitcoin rallied for a second straight day, improving 2.2% to $32,394.24. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

It Will Pay to Be Picky

Although Thursday's disappointing unemployment claims are by no means a reason to panic, they do add to the argument that stocks might be rallying on increasingly wobbly ground.

"There are over 9.2 million job openings, the highest on record by a long shot, yet many are hesitant to get back in the labor force," says Cliff Hodge, chief investment officer for Cornerstone Wealth. "One data point isn't a trend, and a one-off can probably be chalked up to delta variant concerns. If jobs data doesn't inflect soon, the markets and the Fed will be put on notice."

If data undermining the case for continued economic recovery keeps stacking up, investors might want to be a touch more discerning about their stock picks than they would be during a true go-go period for markets.

Folks focused on generating income should prioritize companies with the financial mettle to easily pay (and generously raise) their dividends.

And as for those who prefer growth, don't stick your neck out too far. These 11 growth-at-a-reasonable-price (GARP) stocks provide both attractive growth prospects and reasonable risk profiles that will cushion any downside in a broader market selloff.

Another potential source of protection and upside potential are these 11 "safe" stocks – a collection of equities highlighted by investment research firm Value Line for both their fundamental strength and their bright forward-looking prospects. Read on as we run down this group of stable stocks expected to deliver sizable gains over the next year-plus.