By Thornton McEnery and William Watts
Stocks ended higher Thursday, buoyed by upbeat economic data, as investors shook off worries that a pickup in inflation could force the Federal Reserve to begin reining in its accommodative monetary policy sooner than expected.
How did stock benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.36% closed up 188.11 points, or 0.6%, at 34,084.15.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.02% rose 43.244 points, or 1.1%, to end at 4,159.12.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.70% jumped 236 points, or 1.8%, finishing at 13,535.74.
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 drove the market?
U.S. stocks closed higher, ending a three-session skid, as mostly upbeat round of economic data provided a backdrop for gains.
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 gains reversed 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.
Recent pressure on stocks has been attributed to concerns about lofty stock valuations, uncertainties about the degree to which the recovery will boost inflation, and worries about froth 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 for clarity on the outlook for the economy and markets.
“Our view is that each of the factors pushing the markets lower has been (or will prove) temporary,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note.
UBS expects spillovers from the crypto market to be limited, while inflation pressures are likely to prove transitory, he said, adding that global progress in curbing the pandemic remains an encouraging factor.
“Since we believe the equity rally has further to run, we advise investors to use elevated volatility to build long-term exposure,” he wrote.
Market participants were 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.”