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The Dow was struggling to maintain altitude in record territory Thursday, with technology shares being hit hardest, despite a report showing weekly jobless benefit claims at the lowest level in the COVID era, ahead of the nonfarm payrolls report for April due on Friday.
How are stock benchmarks performing?
-
The Dow
DJIA,
+0.51%
added 187 points to reach about 34,417, a gain of 0.6%, near an intraday record at 34,437.10 and above a Thursday low at 34,185.06. -
The S&P 500 index
SPX,
+0.30%
was rising 15 points, or 0.4%, at 4,182. -
The Nasdaq Composite Index
COMP,
-0.04%
traded up 3 points, or less than 0.1%, to 13,586, well off its lows of the session at 13,439.39, as the benchmark tries to avoid the longest losing skid since a five-day slide ended Oct. 19.
On Wednesday, the Dow rose 97.31 points to close at a record 34,230.34, a gain of 0.3%, marking its 22 record closing high of 2021. The S&P 500 added 2.93 points, or 0.1%, finishing at 4,167.59, while the Nasdaq Composite Index fell 51.08 points, or 0.4%, to end at 13,582.42.
What’s driving the market?
Initial unemployment claims in the U.S. fell to 498,000 for first time in pandemic era, pointing to an improving labor market but also raising questions for some investors about the specter of rapidly rising inflation. The weekly claims are better than the previous week’s total of 590,000, and come in better than Dow Jones estimate for claims of 527,000.
U.S. state continuing jobless claims rose 37,000 to 3.69 million and total U.S. continuing jobless claims dropped 404,509 to 16.2 million as of April 17.
“Claims have declined by 33% since the start of April, further confirmation that a recovery in the labor market is well underway,” wrote economists Nancy Vanden Houten and Greg Daco from Oxford Economics, in a report.
“We expect more evidence of that recovery in tomorrow’s April jobs report and look for an increase in payroll employment of 775,000,” the economists said.
In other U.S. economic reports, U.S. productivity rose at 5.4% annual rate in first quarter, while unit labor costs were down at a 0.3% rate over the same period.
Stocks have been buttressed by hope that the Federal Reserve will remain accommodative even as the U.S. and the world attempts to stage a recovery from the worst pandemic in a century.
During a CNBC interview on Wednesday Fed Vice Chairman Richard Clarida said that it is still not time to consider pulling back measures put in place by the central bank that have helped to damp the worst of the economic effects from the deadly pathogen. “We’re still a long way from our goals, and in our new framework, we want to see actual progress and not just forecast progress,” Clarida said.
However, Dallas Federal Reserve Bank President Robert Kaplan, said that the Fed should reduce its bond-buying program, which had helped to support financial markets through the public-health crisis, “sooner rather than later” because the economy has improved rapidly, speaking at the Levy Economics Institute of Bard College.
Kaplan’s comments come after remarks made by Treasury Secretary Janet Yellen were seen as similarly hawkish on Monday.
Talk of dialing back accommodative monetary policy in the U.S. come as the Bank of England on Thursday voted 8-1 that the pace of continuing government bond purchases can be “slowed somewhat.”
A strengthening economic backdrop and effective vaccine rollouts in the U.S. have been the main focus for bullish investors.
But analysts say that investors are still struggling to find reasons to push stocks to further gains, while a fitful rotation has driven investors momentarily out of highflying technology-related stocks and into industrials, banks and energy, which had been the worst performers during the worst of the pandemic but which are expected to perform better as economies reopen.
“There is a growing belief that [first-quarter eranings] may be as good as it gets if margin pressure and the threat of tapering spooks equity punitively,” said Arnim Holzer, macro and correlation defense strategist at EAB Investment Group.
Notably, a popular exchange-traded fund run by Cathie Wood, ARK Innovation ETF
ARKK,
is trading 30% below its high struck earlier this year, and off 10% in the year to date after being a 2020 highflier.
Meanwhile, vaccine makers Pfizer
PFE,
BioNTech
BNTX,
and Moderna
MRNA,
were in focus, following the announcement from U.S. Trade Representative Katherine Tai that the U.S. supports the waiver of intellectual-property protections on COVID-19 vaccines. Shares in Pfizer Inc., Moderna Inc., Johnson & Johnson
JNJ,
and Novavax Inc.
NVAX,
all involved in the making of COVID-19 vaccines, fell Thursday.
German leader Angela Merkel, however, was said to oppose the waiver of vaccine intellectual property protections.
Another wave of Fed speakers is on deck for Thursday. Cleveland Fed President Loretta Mester will deliver a speech to the University of California at Santa Barbara at 1 p.m.
Which companies are in focus?
- Shares of Regeneron Pharmaceuticals Inc. REGN rose 2.3% Thursday, after the biotechnology company beat first-quarter profit and revenue expectations, with sales of its REGEN-COV antibody cocktail to the SARS-CoV-2 virus also topping forecasts.
- SeaWorld Entertainment Inc. SEAS said Thursday it had net loss of $44.9 million, or 57 cents a share, in the first quarter, narrower than the loss of $56.5 million, or 72 cents a share, posted in the year-earlier quarter.
- Coach parent Tapestry Inc. TPR reported Thursday that it swung to a fiscal third-quarter profit that beat expectations, as Coach and Kate Spade sales rose above forecasts.
- Shares of Norwegian Cruise Line Holdings Ltd. NCLH fell 6% Thursday, after the cruise operator reported a wider-than-expected first-quarter loss and revenue that fell more than forecast, while cash burn was in line with forecasts and said it was preparing to return to service this summer.
- Wayfair Inc. W reported first-quarter net income totaling $18.2 million, or 16 cents per share, after a loss of $285.9 million, or $3.04 per share, last year.
- Cardinal Health Inc. shares CAH slid 10.3%, after the drug distributor posted weaker-than-expected earnings for its fiscal third quarter and lowered the top end of its guidance.
How are other assets faring?
- In Europe, the Stoxx Europe 600 SXXP traded 0.4% lower, while London’s FTSE 100 UKX, added 0.2%.
- The 10-year Treasury note yield TMUBMUSD10Y shed about 1 basis point to 1.57.
- The greenback was 0.4% lower, based on the ICE U.S. Dollar Index DXY.
- Gold futures GC00 surged $31.50, or 1.8%, to trade above $1,800 an ounce on Comex. U.S. crude futures CL.1 fell 55 cents, or nearly 0.8%, at $65.11 a barrel on the New York Mercantile Exchange, heading for a third straight gain.
-
In Asian trade, Hong Kong’s Hang Seng Index HSI rose 0.8%. China’s Shanghai Composite
SHCOMP,
-0.16%
felll 0.2%, while Japan’s Nikkei 225
NIK,
+1.80%
rose 1.8%.
