Stocks built on a mostly positive start Thursday morning in a bid to end a three-day losing streak, buoyed by upbeat economic data as investors shake off worries that a pickup in inflation could force the Federal Reserve to begin reining in its accommodative monetary policy sooner than expected.
How are stock benchmarks performing?
-
The Dow Jones Industrial Average
DJIA,
+0.88%
was up 109.14 points, or 0.3%, at 34,005.18. -
The S&P 500
SPX,
+1.15%
rose 28.32 points, or 0.7%, to 4,144. -
The Nasdaq Composite
COMP,
+1.73%
jumped 176.05 points, or 1.3%, to 13,475.79.
On Wednesday, stocks ended well off session lows but still lost ground for the third straight daily decline for all three major benchmarks. The Dow fell 164.62 points to close at 33,896.04, a decline of 0.5%, after a drop of more than 580 points at its session low. The S&P 500 index fell 0.3%, while the Nasdaq ended virtually unchanged.
What’s driving the market?
A mostly upbeat round of economic data provided a backdrop for gains, analysts said.
First-time applications for U.S. unemployment benefits fell to a pandemic low last week, the government reported Thursday. Initial jobless claims fell 34,000 to 444,000 in the week ended May 15. Economists surveyed by Dow Jones and The Wall Street Journal had forecast new claims to fall to a seasonally adjusted 452,000.
Meanwhile, the Conference Board Leading Economic Index saw a second consecutive solid gain in April, a sign the economy’s recovery from the pandemic is gathering momentum.
Separately, a Philadelphia Fed gauge of regional factory activity declined in May, pulling back from a 50-year high in April.
The data helped blunt a weaker tone across equity markets after a broad-based, global selloff on Wednesday that spread across assets viewed as risky, including equities, commodities and cryptocurrencies.
Analysts said stocks may continue to struggle for direction in the near term.
“Momentum is indeed waning in U.S. stocks as fatigue sets in and anxiety slowly rises (elevated volatility), but we are missing a clear trigger for a significant, albeit temporary, setback,” wrote Sebastien Galy, strategist at Nordea Asset Management, in a daily note.
The downtrend shaping up in U.S. equity markets has been attributed to concerns about lofty stock valuations, uncertainties about the degree to which the recovery will boost inflation, and worries that evidence of excess is building in parts of the financial system.
Against that backdrop, turbulence has become a bigger feature of the market as investors parse key data points and comments from the Fed that could offer clarity on the outlook for the economy and market.
Market participants are still digesting Fed minutes from Wednesday, which showed that “a number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.”
Read: Fed takes baby step toward scaling back its bond purchases
Most Fed members have said that the economy hasn’t made substantial progress toward its goal of a healthy and vibrant labor market to merit a removal of accommodation, but talk of tapering has historically been a boogeyman for risk-taking.
“Tentative — the question remains: when does the Fed think it’s hit the landing area for the economy, and does inflation take off in the meantime?” wrote Neil Wilson, chief market analyst at Markets.com, in a note.
Adding to overall concerns about the mood on Wall Street, has been the downturn in bitcoin
BTCUSD,
+8.59%,
which has been regarded as a sign of waning risk appetite. Bitcoin took a $10,000 U-turn on Wednesday, hitting a low around $30,000 only to return to a price around $40,000, amid a wild selloff for the world’s No. 1 digital asset. Bitcoin was up 11% above $41,700 Thursday.
Which companies are in focus?
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Cisco Systems Inc.
CSCO,
+0.79%
shares fell 0.8%, after the company delivered an earnings outlook late Wednesday that fell short of Wall Street expectations because of higher costs from suppliers amid a global semiconductor shortage. - Shares of Lithia Motors Inc. LAD rose 2.5%, shaking off premarket weakness seen after the auto retailer announced the pricing of its $1 billion stock offering and upsized debt offering.
- Hormel Foods Corp. HRL, reported Thursday fiscal second-quarter profit and sales that topped expectations, and raised its full-year outlook, even as volumes declined. Shares jumped 7.3%.
- Pfizer Inc. PFE and German partner BioNTech SE BNTX said Thursday they have reached a new agreement with the European Commission to supply up to 1.8 billion additional doses of their COVID-19 vaccine. Pfizer shares rose 0.6%, while BioNTech’s American depositary receipts jumped more than 3%.
-
Ralph Lauren Corp.
RL,
-6.66%
delivered results Thursday morning that blew past earnings estimates for its fiscal fourth quarter, and said it may close more stores in fiscal 2022. Shares were down 9%.
What are other markets doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.628%
fell 4.8 basis points to 1.634%. Yields and bond prices move in opposite directions. -
The ICE U.S. Dollar Index
DXY,
-0.34%,
a gauge of the currency against a basket of six major rivals, fell 0.3%. -
Oil futures edged lower, with the U.S. benchmark
CL00,
-0.58%
down 0.7%. Gold futures
GC00,
-0.15%
were also weaker, down 0.2%. -
The Stoxx Europe 600 index
SXXP,
+1.18%
rose 1.1%, while London’s FTSE 100
UKX,
+0.86%
gained 0.7%. -
Hong Kong’s Hang Seng Index
HSI,
-0.50%
fell 0.5%, while the Shanghai Composite
SHCOMP,
-0.11%
gave up 0.1% and Japan’s Nikkei 225
NIK,
+0.19%
rose 0.2%.
