Supportive economic statistics and energy firms benefiting from $75-a-barrel oil helped U.S. equities close higher Thursday, with the S&P 500 index extending its run into record territory for the 6th day in a row. What happened to equity benchmarks?
The Dow Jones Industrial Average DJIA, +0.38 percent finished the day up 131.02 points, or 0.4 percent, at 34,633.53.
The S&
The Nasdaq Composite COMP, +0.13 percent rose 18.42 points, or 0.1 percent, to 14,522.38. This is the second-highest closing in Nasdaq history.
The S&P 500 advanced 5.70 points, or 0.1 percent, to 4,297.50 on Wednesday, surpassing its total number of record finishes in 2020; the Dow finished 210.22 points higher at 34,502.51, a gain of 0.6 percent, bringing the blue-chip benchmark within 1% of its May 7 record close of 34,777.76. The Nasdaq Composite Index dropped 24.38 points, or 0.2 percent, to 14,503.95, its lowest level in three sessions.
What was the market’s driving force? On Thursday, the S&P 500 stormed to its sixth consecutive record close, led by cyclical companies such as energy, financials, and industrials, but growth stocks ended the session lower. Although the economy has recovered from the COVID outbreak, there are still concerns about the job market and inflation, which might undermine the bullish feeling that has been driving all three major stock indices. After achieving their greatest first-half results since 2019, the three main indices made a fresh run toward, or above, past records on Thursday. The monthly payroll data from the Labor Department, however, will be the main issue in terms of judging the progress of the economic recovery on Friday. The Federal Reserve has recently emphasized the need of reclaiming lost jobs as a crucial to the economy’s recovery. In an interview with MarketWatch, Peter Cardillo, chief market analyst at Spartan Capital, said, “The big question mark is going to be the participation rate and, even more so, what the hourly wage expenses are.” “I don’t see the participation rate changing substantially, and it’s likely to remain stuck around recent levels. However, an increase in hourly wages is possible, which might be a negative for the bond market.” See: The United States may have added 700,000 new jobs in June, but millions of others remain unemployed. According to Labor Department data released on Thursday, first-time jobless claims declined to 364,000 last week from 411,000 the week before. Economists predicted a drop to 380,000. The figures come after ADP released a better-than-expected update on private-sector job growth on Wednesday. About the weekly drop in unemployment claims, Cliff Hodge, chief investment officer for Cornerstone Wealth, said, “Not only did we publish the lowest number since the pandemic began, but it also reverses the trend on misses that we’ve seen in the prior several weeks.” “Staying below that big-round-number [400,000] mark could boost risk-taking confidence during the dog days of summer,” he said. Meanwhile, the final reading of IHS Markit’s June manufacturing PMI in the United States was 62.1, down from a flash estimate of 62.6 but unchanged from the May final figure. The more closely watched manufacturing index from the Institute for Supply Management fell to 60.6 percent in June from 61.2 percent in May, coming in slightly below Wall Street expectations. A result of higher than 50 shows that activity is increasing. In a note, James Knightley, chief international economist at ING, said, “Make no mistake, this is an exceptionally strong report where anything above 50 is in growth zone.” The US Commerce Department announced that construction spending declined 0.3 percent in May to $1.55 trillion on a seasonally adjusted annual rate. The Wall Street Journal polled economists, who predicted a 0.5 percent increase. Crude oil prices rose on Thursday, despite the Organization of Petroleum Exporting Countries and its Allies (OPEC+) deferring a decision on further relaxation of supply curbs until Friday. Beginning in August, they were expected to agree to increase output by roughly 500,000 barrels per day. As the global economy gathers traction, this increase is projected to be easily absorbed by the market. The stock of Chevron CVX, +1.40 percent increased by 1.4 percent, making it one of the Dow’s best performers. According to a renowned economist, oil might hit $100 as the commodities boom swings away from China. According to a report released on Thursday by the nonpartisan Congressional Budget Office, the US budget deficit would reach $3 trillion in fiscal year 2021. According to the CBO, the shortfall would be 13.4% of GDP, the second-largest since 1945, reflecting congressional fiscal stimulus to aid the economy’s recovery from the pandemic. In public health news, the World Health Organization announced that a 10-week reduction in new COVID cases in Europe has ended, with cases increasing by 10% last week. According to the Guardian, WHO regional director for Europe Hans Kluge said the spike is due to reduced regulations and increasing mobility, and that if discipline isn’t maintained, a new wave will arise. Which businesses were the subject of the investigation?
On Thursday, Robinhood Markets, the popular trading app that grew in popularity during the pandemic, filed documents for an initial public offering on Nasdaq under the ticker name “HOOD.” The company has 17.7 million monthly active users and $81 billion in assets under custody, according to the filing.
Shares of McCormick & Co. MKC declined 0.4 percent after the spice and flavorings producer topped expectations for the fiscal second quarter and upped guidance.
MKS Instruments Inc. is a company that manufactures instruments.
MKSI announced on Thursday that it has struck an agreement to buy Atotech Ltd. ATC in a cash-and-stock deal worth $5.1 billion in equity and $6.5 billion in enterprise value.
MKS stock dropped 4%, while Atotech stock dropped 1.7 percent.
Elliott Management has called on GlaxoSmithKline GSK, +0.88% to appoint new directors to its board of directors and launch a process to determine the future of Emma Walmsley, the company’s troubled CEO.
Late Wednesday, Krispy Kreme Inc. DNUT, +23.53 percent priced its initial public offering at $17 per share, well below the estimated range of $21 to $24 per share. The Nasdaq listed the shares for the first time on Thursday. The stock increased by 20.5 percent.
NIO Inc. NIO, -4.32 percent, a Chinese electric car manufacturer, saw its stock drop 4.3 percent after the firm announced that it delivered 8,083 vehicles in June, up 116.1 percent over the same month a year ago.
The stock of General Motors Co. GM, -0.10 percent climbed 1.4 percent after the automaker announced that it sold 688,236 vehicles in the second quarter, up 40% from pandemic-reduced levels a year ago.
What happened in other markets?
The 10-year Treasury note yield TMUBMUSD10Y, 1.453 percent, increased 3.6 basis points to 1.479 percent. The yield curve and the price of debt move in opposite directions.
The ICE US Dollar Index DXY, +0.13 percent, which measures the currency against a basket of six main competitors, was up 0.1 percent.
After OPEC+ postponed a decision on whether to increase output beginning next month, the US oil benchmark CL00, +2.04% ended up 2.4 percent at $75.23 a barrel. Gold futures GCQ21, +0.33 percent gained $5.20, or 0.3 percent, to settle at $1,776.80 per ounce.
In European shares, the Stoxx 600 Europe SXXP, +0.62 percent gained 0.6 percent, while London’s FTSE 100 UKX, +1.25 percent gained 1.3 percent.
In Asia, the Shanghai Composite SHCOMP, -0.07% was down 0.1 percent, while Japan’s Nikkei 225 NIK, -0.29% was down 0.3 percent.
Mark DeCambre contributed to the story./n
