U.S. stock benchmarks closed in positive territory Thursday, finishing off their best levels, with a rally in shares of energy and financials powering the day’s moves. A rally in the technology-related Nasdaq helped to drive the index retrace its coronavirus-induced selloff of the past two months.
The gains came despite a U.S. weekly jobless claims report showing another 3 million Americans lost their jobs, but investors appeared relieved that the pace of job losses is ebbing as some states begin to reopen their economies.
How are markets faring?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.13% ended 211.25 points, or 0.9%, higher, at 23,875.89, off its intraday high at 24,094.62 as component Pfizer Inc . /zigman2/quotes/202877789/composite PFE +0.06% closed down 3.1%; while the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.34% added 32.77 points, or 1.2%, to close at 2,881.19, led by a 2.5% rally in the energy sector /zigman2/quotes/210600521/delayed XX:SP500.10 +3.60% and a 2.2% climb in financials /zigman2/quotes/210599854/delayed XX:SP500.40 +0.70% .
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.94% wrapped up at 8,979.66, up 125.27 points, or 1.4%, notching a 0.08% year-to-date advance, erasing its losses for 2020.
What’s driving the market?
It was another turbulent finish for the major stock benchmarks in the final hour of action but stocks managed to book solid gains, as bullish investors bet on a stabilization in oil-and-gas stocks—even though oil relinquished a sharp rally to end lower—and as financials punched higher amid a widening of the spread between the short-dated 2-year Treasury /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y -9.47% and the 10-year notes, a condition that is favorable to a bank’s business model.
Markets appeared to mostly shake off another 3.2 million Americans losing their jobs at the end of April, according to Labor Department data earlier in the session, bringing the total job losses amid the COVID-19 pandemic to over 33 million, though investors were relieved that the pace of job losses is slowing.
That report came a day after payroll processor Automatic Data Processing Inc. /zigman2/quotes/207661132/composite ADP 0.00% reported a 20.2 million decline in employment in April among the nation’s privately run companies.
On Friday, the more closely followed nonfarm-payrolls report from the Labor Department will offer another look at the employment picture which could reveal that the unemployment rate up to 15% from a 50-year low of only 3.5% two months ago.
“Usually equity markets bottom five to seven months before economic growth troughs,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. She said it was unlikely that we would retest lows for the equity benchmarks put in on March 23.
However, she said pullbacks weren’t out of the question.
“The only thing is that the market has run pretty far pretty fast, most likely on the speed and magnitude of fiscal and monetary stimulus,” she said. “That means it’s possible to get short term corrections.”
Overall, Verdence maintains a positive outlook over the 12-18 month term, Horneman said. That means any corrections should be seen as buying opportunities, she advised.
Markets also drew some comfort from the latest round of economic results out of China.