U.S. stocks rose Thursday, as a parade of big banks released upbeat earnings and data showed a drop in first-time jobless claims to the lowest since the pandemic began and a smaller-than-expected rise in producer prices.
Video: Are inflation fears priced into the market? (CNBC)
A continued fall in Treasury yields, meanwhile, offered support for interest rate sensitive technology stocks.
- The Dow Jones Industrial Average rose 339.91 points, or 1%, to 34,717.72.
- The S&P 500 advanced 44.33 points, or 1%, to 4,408.13.
- The Nasdaq Composite was up 169.69 points, or 1.2%, at 14,741.32.
On Wednesday, the Dow Jones Industrial Average fell less than a point to extend a losing streak to four sessions, while the S&P 500 rose 0.3% and the Nasdaq Composite advanced 0.7%.
What’s driving markets
Corporate earnings reporting season is picking up steam, with results from a handful of major banks topping expectations. Investors also cheered economic data, including a drop in first-time claims for unemployment benefits last week to 293,000 — the first sub-300,000 reading since before the pandemic took hold in early 2020.
“While the September jobs report revealed a slower pace of job creation, the labor market recovery continues to move forward and the claims data are consistent with an improving employment situation,” said Nancy Vanden Houten, lead economist at Oxford Economics, in a note. “We expect further progress in the months ahead as the health situation is improving following the surge in cases over the summer from the delta variant.”
In other U.S. data, producer prices rose 0.5% in September compared with 0.7% in August but were up 8.6% for the September year compared with 8.3% for the year to August.
Investors have also focused on the more benign elements of Wednesday’s consumer-price index report, which showed the core measure that excludes food and energy prices rising 0.2% in September, keeping the year-over-year growth rate at 4%.
Prices of airfares, hotels and used cars were among the costs that declined. “While that result owed to some weakness in prices sensitive to the virus — such as airfares, hotel charges, car rental fees and apparel — the yield on the 10-year U.S. Treasury continued to descend from last week’s highs,” said Emily Nicol, economist at Daiwa Capital Markets Europe.
In the markets, the drop in longer-dated yields overshadowed everything else, breathing life back into equities and gold prices,” said Marios Hadjikyriacos, senior investment analyst at XM, in a note.
“Yield-sensitive tech and growth stocks benefited the most as traders grew more confident that the Fed won’t risk a repeat of the late-2018 market crash, which was triggered by rates rising too far…That said, the technical structure still argues for caution as the S&P 500 and the Nasdaq have been unable to record a higher high yet, even if ‘stagflation’ worries have taken a back seat,” the analyst said.
Which companies are in focus?
- Bank of America Corp. reported profit and revenues that topped expectations as it released $1.1 billion in reserves to its bottom line, driven primarily by asset quality improvements. Shares rose 2.3%.
- Shares of Wells Fargo & Co. declined 2.2% after the bank beat Wall Street estimates, while releasing $1.7 billion from loan-loss reserves.
- Morgan Stanley MS shares were 0.3% higher after the bank reported results that beat expectations, helped by a 68% rise in investment-banking revenue to $2.85 billion from $1.7 billion.
- Shares of Citigroup Inc. rose were off 0.3% after the bank said earnings rose 48%, beating estimates.
- UnitedHealth Group Inc. shares rose more than 6% after the healthcare company and Dow component raised its guidance for full-year earnings, and said that its previous expectations for how Covid-19 will affect results this year remained steady.
- Shares of Walgreens Boots Alliance rose were down 2.7% after the pharmacy retailer reported fiscal fourth-quarter earnings and sales that beat expectations.
- More than 10,000 Deere & Co. workers went on strike Thursday, after rejecting a contract offer. Shares were down 1.1%.
What are other markets doing?
- The 10-year Treasury yield fell 1.5 basis points to 1.534%. Yields and debt prices move in opposite directions.
- The ICE U.S. Dollar Index a measure of the currency against a basket of six major rivals, fell 0.2%.
- The Stoxx Europe 600 rose 1.1%, while London’s FTSE 100 raised 0.8%.
- The Shanghai Composite fell 0.1%, while Japan’s Nikkei 225 advanced 1.5%.
- Oil futures rose, with the U.S. benchmark up 0.5% at $80.84 a barrel. Gold futures edged up 0.2% to $1,797.50 an ounce.
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