Stocks finished higher on Thursday as investors took comfort in a dip in weekly jobless claims and looked past disappointing tech earnings and the mania surrounding heavily shorted names such as GameStop .
The Dow Jones Industrial Average finished up 300 points, or 0.99%, to 30,603, the S&P 500 rose 0.98% and the Nasdaq rose 0.5%.
Jobless claims dropped more than expected last week and data showed the U.S. economy expanded in the fourth quarter at a 4% annualized rate.
Apple posted stronger-than-expected fiscal-first-quarter earnings and quarterly revenue of more than $100 billion for the first time. But the stock ended 3.5% lower after the iPhone giant issued a cautious outlook.
Tesla fell 3.3% Thursday. The electric-vehicle company reported a sixth consecutive quarter of profit, but the figure was well below Wall Street expectations. Operating margins also shrank to 5.4% in the fourth quarter.
Stocks fell Wednesday, posting their biggest drop since October, as shares of technology giants fell sharply and Federal Reserve Chairman Jerome Powell was cautious about the outlook for a U.S. economic recovery. The Dow fell 633 points, or 2.05%, the S&P 500 declined 2.57% and the Nasdaq slumped 2.61%.
“We think it’s going to be a struggle,” Powell said Wednesday. “The pandemic still provides considerable downside risks to the economy.”
The Fed said Wednesday, as expected, that it was keeping interest rates near zero and maintaining its bond-buying program at the current pace of $120 billion a month amid signs an economic recovery “has moderated in recent months.”
“Going forward, we believe that the Fed needs to stay the course because we don’t have the macro environment for the market to sustain itself,” said David W. Wagner, portfolio manager and analyst at Aptus Capital Advisors.
“The market is still using crutches as it’s not fully healed — that’s apparent given that there are so many Americans worse off relative to where they were last year. There are 9 million Americans still unemployed — more than what we saw during the financial crisis.”
Investor anxiety has been heightened by the mania gripping heavily shorted shares, such as GameStop, which has soared this week as retail traders bid up the stock and big Wall Street firms bailed.
Many trading platforms, including Robinhood, restricted activity in stocks such as GameStop and AMC Entertainment Holdings . GameStop shares slumped 44% in regular trading Thursday but were more than 20% higher after hours.
“While I don’t think the surge in GameStop shares is a signal of euphoria in the broader stock market, the illumination of this reckless and unethical trading environment may be the catalyst behind a near-term stock market correction,” said David Trainer, chief executive of investment research firm New Constructs.
Bloomberg News reports that Sen. Sherrod Brown (D-Ohio), the incoming chairman of the Senate Banking Committee, said the panel would hold a hearing on the “state of the stock market.”
“People on Wall Street only care about the rules when they’re the ones getting hurt. American workers have known for years the Wall Street system is broken – they’ve been paying the price,” Brown said in a statement quoted by Bloomberg News.
House Speaker Nancy Pelosi (D-California) earlier Thursday had said that Congress would look at what’s happening with GameStop and many other shares that had been targeted by short seller, or investors who bet that stocks will decline.
The Biden administration already is looking at it, and “we’ll all be reviewing it,” she said.
This article was originally published by TheStreet.