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Investing.com – The Dow made an impressive comeback on Thursday, bouncing back from deep losses, led by a surge in financials, even as U.S.-China tensions flared up again and millions more Americans filed for unemployment.
The Dow Jones Industrial Average rose 1.62%, or 377 points, but had been down by as many 570 points at the lows of the day. The S&P 500 gained 1.15%, while the Nasdaq Composite added 0.91%.
A jump in financials stocks turned the tide of selling to buying as traders seemingly swooped for beaten-down bank stocks, even as the fears of a deep recession and longer-than-expected recovery threaten to ramp-up defaults in the coming months.
JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) closed more than 4% higher, while Wells Fargo (NYSE:WFC) jumped 6.9% following a report of speculation it could merge with Goldman Sachs (NYSE:GS).
But the economic backdrop is hardly supporting the bull case in markets, as the latest surge in weekly jobless claims means that now one in four Americans are claiming unemployment benefits.
The U.S. Department of Labor reported Thursday that initial jobless claims were 2.981 million for the week ended May 9, above economists’ forecasts of 2.5 million.
Just a day earlier, Federal Reserve Chairman Jerome Powell said he expected unemployment would likely peak over the next month.
Tech stocks, meanwhile, also recovered losses as Facebook (NASDAQ:FB) and Google (NASDAQ:GOOGL) turned positive, with chip stocks also catching a bid.
Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Micron Technology (NASDAQ:MU) were among the biggest gainers.
Elsewhere, Microsoft (NASDAQ:MSFT) climbed 0.5% after it acquired Metaswitch Networks as the tech giant looks to bolster its move into telecommunications.
Energy stocks were supported by rising oil prices after the International Energy Agency touted an improved outlook in the wake of easing coronavirus restrictions, though it warned that any resurgence in infections would pose a major risk to oil demand.
Elsewhere, Boeing (NYSE:BA) ended up 0.75% higher, cutting its intraday losses even as Delta Air Lines (NYSE:DAL) said it will “permanently retire” its fleet of 18 Boeing 777 aircraft by the end of the year as part of efforts to cut costs.
