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U.S. stocks edged higher Thursday, but were trimming earlier gains in afternoon trade after a “pretty disappointing” auction of 7-year Treasury notes.
How are stocks trading
-
The Dow Jones Industrial Average
DJIA
was up 67 points, or 0.2%, at 33,618. -
The S&P 500
SPX
rose 21 points, or 0.5%, at 4,296. -
The Nasdaq Composite
COMP
climbed 102 points, or 0.8%, to 13,196.
On Wednesday, the Dow Jones Industrial Average fell 0.2%, while the S&P 500 logged a gain of 1 point, barely avoiding what would have been a sixth red day in seven. It also touched its lowest level intraday since early June.
What’s driving markets
Stocks were holding gains, but off Thursday’s best levels after a 7-year auction of Treasury notes saw tepid demand.
“We were up higher earlier in the day, but results from a Treasury auction put a little cold water on the rally,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
Pavlik also said a bounce in technology shares was providing some support for stocks overall, and that investors remained wary of the recent rally. “I think it’s natural for people to test it out and see if it’s going to hold.”
A 7-year auction of Treasury notes on Thursday was awarded at 4.673%, a basis point higher than the “when-issued” 4.665% yield at the competitive deadline, said Will Compernolle, a macro strategist at FHN Financial, in an email to MarketWatch.
“The bid/cover ratio was the smallest since April. So, pretty disappointing overall.”
Still, an upward march in Treasury yields showed signs of slowing. The 10-year Treasury yield BX:TMUBMUSD10Y touched a fresh 16-year high north of 4.650% earlier, but was relatively flat at 4.62% in afternoon trade.
Also, after U.S. WTI crude oil futures touched $95 a barrel early Thursday, the most expensive in 13 months, prices were pulling back, helping to alleviate some of the market’s concerns about higher inflation.
Art Hogan, chief market strategist at B. Riley Financial, said stocks were recovering from oversold territory, while moving out of a period of seasonal weakness in the second half of September, but most important, the move higher in Treasury yields appeared to be growing more orderly, helping to tamp down traders’ concerns about rising borrowing costs.
“We need to see Treasury yields calm down, they don’t need to fall back, they just need to stop rising in parabolic fashion,” Hogan said.
The yield on the 10-year has gained nearly 60 basis points since the start of September, on track for the worst monthly performance in a year, FactSet data show.
Others noted the S&P 500 index may be finding support at the 4,300 level. “Stocks have been steadily declining and now are approaching some key technical levels that should attract some buyers,” said Edward Moya, senior market analyst at OANDA, in emailed commentary.
On the economic data front, the number of Americans who applied for unemployment benefits rose slightly last week to 204,000, but layoffs remained extremely low and there was no sign of rising unemployment.
Other data showed, the U.S. economy grew at a healthy 2.1% annual pace in the second quarter, revised figures showed, but consumer spending turned out to be weaker than originally reported. More recent evidence, however, suggests spending rebounded in the third quarter, as did the broader economy. GDP is forecast to rise 4% or more in the third quarter running from July to September.
More inflation data out of the U.S. and eurozone is expected on Friday, when the Fed’s preferred gauge of consumer prices, the PCE Price Index, will offer more insight into whether price pressures in the U.S. are intensifying once again
Traders are also awaiting Federal Reserve Chair Jerome Powell, who is set to make public comments at 4 p.m. Eastern Time. Fed Governor Lisa Cook is scheduled to speak before that, at 1 p.m.
The S&P 500 is down 4.7% so far this month as long-term borrowing costs have risen sharply in recent weeks to their highest since 2007. The index is on track to fall for four straight weeks for the first time since December.
Companies in focus
-
Peloton Interactive’s
PTON,
+7.09%
stock jumped 5.4% after the connected-exercise-bike maker and yoga-wear giant Lululemon Athletica
LULU,
+0.33%
announced a five-year partnership. -
Micron Technology Inc. shares
MU,
-4.46%
fell 4.6% after the memory-chip maker said another quarter of negative margins are in store and CEO forecasts “several hundreds of millions of dollars” in 2024 data center sales from AI boom. -
GameStop
GME,
-0.60%
surged after the company said billionaire investor and board chairman Ryan Cohen would be named CEO. -
Accenture PLC
ACN,
-4.35%
shares fell on a weak earnings outlook.
—Additional reporting by Jamie Chisholm in London
