U.S. stocks finished off their worst levels of the day, with the Nasdaq eking out a positive finish as investors braced for a litany of quarterly results from behemoths of the technology and e-commerce world, which could influence trade to end a choppy week.
Markets were under pressure at the start of Thursday’s action, prompted by the worst GDP on record in the second quarter and a labor-market report that underscores a rise in COVID-19 cases. Lack of progress in talks between congressional Democrats, Republicans and the White House on a new coronavirus aid package also weighed on sentiment.
How did major benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.36% closed 225.92 points, or 0.9%, at 26,313.65, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.53% lost 12.22 points, or 0.4%, to close at 3,246.22, but had been down by as many as 550 points at the session’s nadir.
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.98% , meanwhile, gained 44.87 points, or 0.4%, to end at 10,587.81 after hitting an intraday low at 10,412.09. All three benchmarks closed well off their worst levels of Thursday trade.
On Wednesday, the Dow rose 160.29 points, or 0.6%, to close at 26,539.57, while the S&P advanced 40 points, or 1.2%, finishing at 3,258.44. The Nasdaq Composite jumped 140.85 points, or 1.4%, to end at 10,542.94.
What drove the market?
Markets mostly ended lower but clawed back from their worst levels of the session after a first reading on U.S. gross domestic product data for the second quarter confirmed the pandemic pummeled the economy. GDP fell at a 32.9% annualized pace, the Commerce Department said, a bit better than the 34.6% annual decline forecast in a MarketWatch survey, but still the worst in history.
Separately, first-time claims for unemployment benefits rose slightly last week, to 1.43 million from an upwardly-revised 1.42 million, while continuing claims also rose to 17 million in the week ended July 18.
“This is really a day that will live in infamy,” said Kent Engelke, chief economic strategist and managing director of Glen Allen, Va.-based Capitol Securities. The economic data wasn’t as bad as feared, Engelke said in an interview just before the opening bell, but four of five of the largest companies in the market report earnings after the close, an event that could be “pivotal,” he added.
“We have this incredible wall of worry,” Engelke said. “The Fed told us yesterday, we’re going to keep zero interest rates forever and ever. But how is this going to impact us down the road? Gold and the dollar are telling us something. What about November? The election is going to get uglier and uglier. How is this going to weigh on sentiment? I could see the wall of worry increasing to a gargantuan cliff.”
There were no signs of progress toward a spending package as lawmakers face a self-imposed Friday deadline to work out a deal. That’s when supplemental unemployment benefits, which have been credited with helping to cushion the blow of the pandemic, are due to expire.
Stocks extended gains Wednesday after the Fed left interest rates unchanged as expected, and indicated that it planned to keep rates near zero and continue to provide support to the economy — and do more if needed. Fed Chairman Jerome Powell warned that the resurgence in coronavirus cases in many U.S. states may be damping economic growth and said that the path of the recovery depends on the path of the virus.
The moves came ahead of what will be the most hectic day of corporate earnings reporting season, with results from dozens of high-profile companies due after the bell on Thursday, including Google parent Alphabet Inc. /zigman2/quotes/205453964/composite GOOG +0.20% /zigman2/quotes/202490156/composite GOOGL +0.31% , Apple Inc. /zigman2/quotes/202934861/composite AAPL +0.51% Facebook Inc. /zigman2/quotes/205064656/composite FB -1.29% and Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -0.81%