The US Labor Department reported Thursday that initial claims for jobless benefits rose by 6,000 last week, catching analysts by surprise as most were expecting a slight decline in claims. The news combined with a report that inflation has stalled, offers up plenty of room for the Federal Reserve to launch a much-anticipated third round of quantitative easing to stimulate the economy, which has slowed to a crawl since 2012 began. Last week's total of 386,000 initial jobless filings was higher than even the most pessimistic of economists who took part in a recent Bloomberg survey, projecting claims would drop to 375,000, on average.
US Stock markets made solid advances in Thursday's session, despite the disappointing news, as investors took the news as incentive for the Fed to launch QE3 when it meets early next week, and that sentiment was further bolstered by a separate report from the Labor Department that the cost of living fell 0.3 percent in May thanks to the biggest decline in gasoline prices in three years. Comments from Fed members, particularly Chairman Ben Bernanke, have expressed concern over the nation's tepid pace of economic growth and stubbornly elevated unemployment rate, and Tuesday's reports certainly won't allay those concerns.