By William Watts and Joy Wiltermuth
U.S. stocks booked a third straight day of gains Thursday, despite data showing first-time applications for unemployment benefits rose last week, as investors focused on health corporate earnings reports.
Even though many S&P 500 index sectors slipped, gains for several technology heavyweights, including Apple and Microsoft, pushed the index higher and close to a new record.
How did major indexes fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.48% rose 25.35 points, or 0.1%, to close at 34,823.35.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.91% gained 8.79 points, or 0.2%, ending at 4,367.48.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.91% tacked on 52.64 points, or 0.4%, finishing at 14,684.60
On Wednesday, the Dow Jones Industrial Average rose 286.01 points, or 0.8%, to finish at 34,798, while the S&P 500 advanced 0.8% and the Nasdaq Composite gained 0.9%.
What drove the market?
Stocks perked up in afternoon trading to rebound for a third day, following Monday’s sharp selloff. All three major indexes were positive on the week, despite economic data Thursday showing some labor market weakness.
Some think recent action in equities could be signaling the beginning of a period of more moderate gains for stocks though, which largely have been moving only higher since last summer.
“We do think we are past the point of peak stimulus pumped into the market from monetary and fiscal support,” said Matt Stucky, portfolio manager, equities at Northwestern Mutual Wealth Management. “The next move to us is down, not up, in terms of monetary support.”
But Stucky also expects unemployment claims to steady this fall as COVID vaccinations help more children in the U.S. return to schools or daycares and workers to jobs, he told MarketWatch.
Earlier on Thursday, the disappointing U.S. jobs data led to a rally in bonds and threatened to undercut the rebound in equities. The Labor Department said initial jobless claims rose by 51,000 to 419,000 in the seven days ended July 17 — the highest level in almost two months. The increase, however, was concentrated in Michigan and Kentucky and likely is tied to the annual retooling of auto plants to build new models while 31 states actually posted declines in jobless benefit claims.
Still, other investors may be getting impatient to see signs of improvement in the labor market.
“One data point isn’t a trend, and a one-off can probably be chalked up to delta variant concerns,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “If jobs data doesn’t inflect soon, the markets and the Fed will be put on notice.”
A strong second-quarter corporate earnings reporting season rolls on though, while most U.S. economic data suggests the recovery from the pandemic is intact.