Dow on pace for record finish above 34,000 mark as retail sales soar, jobless claims hit pandemic low

How are stock benchmarks trading?

• The Dow Jones Industrial Average
  DJIA,
  +0.79%
  gained 279 points, or 0.8%, to reach 34,010, after touching an intraday record at 34,035.48.
• The S&P 500 index
  SPX,
  +0.99%
  added 41 points to reach 4,166, a gain of 1%, carving out an intraday record of 4,169.58.
• The Nasdaq Composite Index
  COMP,
  +1.18%
  advanced 168 points, or 1.2%, to 14,026.

On Wednesday, the Dow closed up 53.62 points or 0.2% to 33,730.89, the S&P 500 finished 16.93 points or 0.4% lower at 4,124.66, while the Nasdaq Composite shed 138.26 points or 1% to close at 13, 857.84, off 1.7% from its Feb. 12 record high.

What’s driving the market?

A big day for earnings reports and economic data got off to a bullish start on Thursday and was aided by a slide in long-term yields in the bond market.

U.S. retail sales surged almost 10% in March thanks to $1,400 stimulus checks paid to consumers by the federal government. Sales climbed 9.8% last month, the government said Thursday. Economists polled by Dow Jones and The Wall Street Journal had forecast a 6.1% increase.

Adding to the market’s optimism, weekly jobless benefit claims fell to a pandemic-era low. U.S. unemployment claims sank by 193,000 in the week of April 10, an unusually large decline that likely reflects both an improving economy but also continuing problems in processing applications for jobless benefits. Initial jobless claims filed traditionally through the states declined to a seasonally adjusted 576,000 from 769,000 in the prior week.

“Stellar jobless claims plus off the charts retail sales packs a positive one two punch and sends strong signals that the economy is full steam ahead toward recovery,” wrote Mike Loewengart, managing director at E-Trade Financial.

“While we haven’t necessarily seen the market move on strong economic beats or misses, it’s certainly a step in the right direction. And with earnings season off to a solid start, the case for continued bullishness should not be ignored,” he said.  

U.S. industrial production also rose 1.4% in March, after a revised 2.6% fall in the prior month that was caused by severe winter weather, the Federal Reserve said Thursday.

See: Coinbase is most valuable U.S. exchange after first day of trading

Investors also were poring over a first-quarter report from Bank of America Corp.
BAC,
-3.03%
after it reported profit that more than doubled and beat expectations, citing strong growth in capital markets and lower credit costs. The bank also announced a $25 billion stock repurchase program.

Quarterly results from PepsiCo
PEP,
+0.12%,
 Citigroup
C,
-0.95%,
 BlackRock
BLK,
+1.88%
 and Delta Air Lines
DAL,
-3.18%,
were also being digested, a day after Goldman Sachs Group
GS,
+0.77%
 and JPMorgan Chase
JPM,
+0.38%
 delivered solid results.

Beyond earnings reports and economic data, some analysts said that investors may becoming more entrenched in thinking that the Federal Reserve will keep interest rates low and liquidity measures in place, despite rising inflation, to continue to stimulate the COVID-stricken economy.

Doubts about the Fed’s commitment had been driving up benchmark bond yields this year but lately yields have stabilized, with the 10-year Treasury note
BX:TMUBMUSD10Y
yielding 1.54% on Thursday.

“While there’s a lot of excitement in equities, traders are also keeping an eye on the fixed income markets. US Treasuries are showing that investors are becoming more convinced by the Federal Reserve’s message that inflation spikes are only transitory and won’t lead to a tightening of policy anytime soon,” wrote Hussein Sayed, Chief Market Strategist at FXTM, in a note.

In a moderated discussion sponsored by the Economic Club of Washington, Federal Reserve boss Jerome Powell said the central bank would likely taper asset purchases “well before the time we consider raising interest rates,” riffing off the 2013-14 playbook. “We haven’t voted on that order, but that is the sense of the guidance that it would work in that way,” Powell said.

On the public health front, a study by Oxford University found the number of people who receive blood clots after getting vaccinated with a coronavirus vaccine are about the same for those who get Pfizer PFE and Moderna MRNA vaccines as well as for the AstraZeneca AZN vaccine that was produced with the university’s help. The study comes after the Food and Drug Administration and the Centers for Disease Control and Prevention requested an immediate halt of Johnson & Johnson‘s
JNJ,
+0.34%
one-shot COVID vaccine.

In other U.S. economic data, the Philadelphia Federal Reserve manufacturing index jumped to a reading of 50.2 in April from a revised 44.5 in the prior month, marking the highest level in almost 50 years. Economists had expected a reading of 42 after the initial reading for March of 51.8, according to a Wall Street Journal survey of economists.

Separately, the New York Federal Reserve’s Empire State Index rose to a reading of 26.3 in April from 17.4 in March, the New York Fed said—its highest reading since October 2017.

Which companies are in focus?

• Shares of Coinbase Global
  COIN,
  -2.37%
  edged lower Thursday, a day after the cryptocurrency platform became the most valuable U.S. exchange Wednesday amid strong demand for its newly listed stock.
• ARK Invest bought cryptocurrency exchange Coinbase Global COIN, which went public Wednesday, for three of the ARK exchange-traded funds, including the flagship ARK Innovation ETF ARKK. ARK Invest bought Coinbase stock valued at $246 million for the ARK Innovation ETF, ARK Next Generation Internet ETF ARKW and ARK Fintech Innovation ETF ARKF. ARK Invest CEO Cathie Wood spoke of Coinbase’s potential, as well as volatility, in an interview with Bloomberg BNN on Wednesday. Shares of Ark Innovation are up 1.5%.
• Shares of UnitedHealth Group Inc. UNH jumped 3.6% into record territory Thursday, after the healthcare services company reported first-quarter profit and revenue that rose above expectations and raised its full-year outlook.
• PepsiCo Inc.
  PEP,
  +0.12%
  said its profit rose for the recent quarter as sales grew. Shares were down 0.2%.
• Tapestry Inc. TPR said Thursday it has made Todd Kahn its permanent chief executive and brand president of Coach with immediate effect, elevating him into the role he has served on an interim basis since July 2020. Its stock was gaining 2%.
• Kimco Realty Corp. KIM announced Thursday an agreement to buy Weingarten Realty Investors WRI in a cash and stock deal that values the owner of grocery-anchored shopping centers at about $3.9 billion. Kimco’s shares were up 1.6%, while Weingarten’s shares were up over 12%.
• Dell Technologies Inc. DELL shares were up 7.1% after the computer maker said it was finally spinning off its majority stake of VMware Inc. VMW. VMware shares were flat.
• TuSimple Holdings Inc. TSP, is set to go public Thursday, after the self-driving trucks maker’s initial public offering priced at $40 a share, above the expected range of between $35 and $39 a share. 

How are other assets faring?

• The ICE U.S. Dollar Index
  DXY,
  -0.05%,
  a measure of the currency against a basket of six major rivals, was down 0.1%.
• U.S. crude for May delivery CL.1 climbed 31 cents, or 0.5%, to settle at $63.46 per barrel.
• The 10-year Treasury note yield BX:TMUBMUSD10Y was shedding 9 basis points to 1.54%. Bond prices move inversely to yields.
• Gold futures traded higher as bond yields slipped, with the June contract GCM21 rising $30.50, or 1.8%, to settle at $1,766.80 an ounce, its highest level in seven weeks.
• In Europe, the Stoxx 600 index SXXP rose 0.5%, while London’s FTSE 100 UKX gained 0.6%.
• In Asia, the Shanghai Composite SHCOMP fell 0.5%, Hong Kong’s Hang Seng HSI closed off 0.4%, and Japan’s Nikkei 225 NIK picked up less than 0.1%.