Market Snapshot: S&P 500 tests record territory as stocks rise after economic data

What are major indexes doing?

• The Dow Jones Industrial Average
  DJIA,
  +0.80%
  rose 219.01 points, or 0.7%, to 34,093.25.

• The S&P 500
  SPX,
  +0.58%
  was up 23.88 points, or 0.6%, at 4,265.72, trading above its record close of 4,255.15 set on June 14 and more than erasing the dip that followed last week’s Federal Reserve meeting.

• The Nasdaq Composite
  COMP,
  +0.80%
  advanced 109.33 points, or 0.8%, to trade at 14,381.07.

On Wednesday, the Nasdaq rose 0.1% to eke out its second consecutive record close, its 16th of 2021, while the Dow edged down 71.34 points, or 0.2% and the S&P 500 fell 0.1%.

What’s driving the market?

Data on first-time U.S. unemployment benefit applications disappointed. Initial claims fell 7,000 to 411,000 in the week ended June 19. Economists had looked for a fall to 380,000.

“The labor market remains lumpy and uneven, so the only real takeaway is that removing fiscal and monetary support too early is the biggest risk to the recovery,” said Jamie Cox, managing partner for Harris Financial Group  

“Although this doesn’t solidify any ‘transitory’ argument, it does anchor markets to pay more attention to the labor market for cues on the future path of rates,” Cox said.

Members of a bipartisan group of U.S. lawmakers holding talks on a roughly $1 trillion infrastructure proposal said they had agreed to a framework for a package, with plans to meet with President Joe Biden on Thursday to finalize the deal which could ultimately mean further fiscal stimulus for the economy.

“An agreement in principle is possible today before Congress leaves town for the two-week July 4 break, but as long as the package sits in the summer sun, the more it will attract opposition,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note.

“It will take weeks to iron out all of the details, and then the suspense will rise — could this attract 60 votes in the Senate, avoiding a filibuster?” he wrote.

Stocks were buoyed earlier this week as Federal Reserve Chairman Jerome Powell emphasized on Tuesday that the central bank still expected to see inflation pressures to prove transitory. Analysts said some steam came out of the market in Wednesday’s session after Federal Reserve Bank of Atlanta President Raphael Bostic said he pulled forward “my projection for our first move to late 2022,” following a similar comment on interest rates last week from St. Louis Reserve President James Bullard.

In other U.S. economic data, May durable-goods orders climbed 2.3% in May though core capital goods orders slipped.

The advanced trade deficit in goods widened to $88.1 billion in May from $85.7 billion the previous month. Core capital goods orders declined 0.1% in May. And a revised estimate of first-quarter gross domestic product left the rate of growth unchanged at an annual rate of 6.4%.

The pace of growth in the U.S. economy in the first quarter remained unrevised at a 6.4% annualized rate after the latest revision, the Commerce Department said Thursday.

“Stock markets have even better prospects through year-end,” said Brad McMillan, Chief Investment Officer for Commonwealth Financial Network in a mid-year outlook. “The economy is likely to keep growing at a fast pace, and the government will continue to provide fiscal and monetary stimulus,” he said. “As such, corporate earnings are likely to keep growing—and to push markets higher.”

Several Fed officials are also slated to speak over the course of the day, including Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, New York Fed President John Williams and St. Louis Fed President James Bullard.

Which companies are in focus?

• Rite Aid Corp.
  RAD,
  -14.76%
  shares fell 12%, after the drugstore chain on Thursday beat fiscal first-quarter profit expectations but came up short on revenue, amid weakness in the pharmacy services business, while also providing a mixed full-year outlook. 

• Darden Restaurants Inc.
  DRI,
  +3.17%
  on Thursday said it turned a profit for the fiscal fourth quarter as same-restaurant sales, or those at restaurants open 16 months or longer, rose 90.4%, nearing pre-pandemic levels. The company added 30 net new restaurants during the period. Darden shares rose 2.3%.

• Shares of Accenture PLC
  ACN,
  +2.07%
  rose more than 3%, after the management consulting company on Thursday reported fiscal third-quarter profit and revenue that beat expectations. Accenture also raised its full-year outlook, citing demand for digital transformation.

• FedEx Corp.
  FDX,
  +0.88%
  suspended about 1,400 customers of its freight-shipping service earlier this month, The Wall Street Journal reported Thursday, a move that surprised customers and was aimed at easing a congested network taxed by relentless package volume. Service to some customers was resumed this week. Shares were up 0.7%.

• Chinese electric-car maker Xpeng Inc. 
  XPEV,
  -0.84%
  said Thursday it is planning a global offering of 85 million Class A shares, split between an international offering of 80.75 million shares and a Hong Kong offering of 4.25 million shares.

What are other markets doing?

• The yield on the 10-year Treasury note
  TMUBMUSD10Y,
  1.475%
  ticked up 0.8 basis point to 1.485%. Yields and debt prices move in opposite directions.

• The ICE U.S. Dollar Index
  DXY,
  -0.10%,
  a measure of the currency against a basket of six major rivals, fell 0.1%.

• Oil futures edged lower, with the U.S. crude benchmark
  CL00,
  -0.27%
  down 0.6% at $72.65 a barrel. Gold futures
  GC00,
  -0.03%
  tiptoed higher, up 0.1% at $1.785.80 an ounce.

• In European equities, the pan-Continental Stoxx 600
  SXXP,
  +0.89%
  rose 0.8%, while London’s FTSE 100
  UKX,
  +0.55%
  gained 0.6%.

• In Asia, the Shanghai Composite
  SHCOMP,
  +0.01%
  and Japan’s Nikkei 225
  NIK,
  +0.00%
  both ended fractionally higher, while the Hang Seng Index
  HSI,
  +0.23%
  rose 0.2% in Hong Kong.