U.S. stocks ended higher on Thursday after a hectic trading session with benchmarks digging out of the deep hole earlier in the day as investors weighed the improvement in economic data against the country emerged from the COVID pandemic.
Signs of a recent recovery in the economy have seen US Treasury bond yields spike in recent months, leading to funds converting back from stocks to bonds at the end of the quarter and yields falling this week.
How are stock benchmarks performing?
The Dow Jones industrial average
closed 199.42 points or 0.6% higher at 32,619.48 but was down as much as 348 points by 32,871.41 on Thursday.
The S&P 500
rose 20.38 points to finish at 3,909.52, up 0.5%, well below its intraday low of 3,853.50.
The Nasdaq Composite Index
closed at 12,977.68, an increase of 15.79 points, which corresponds to an increase of 0.1%.
The Russell 2000 Index
An indicator for stocks with low capitalization rose 2.3% to 2,183.12, falling from an intraday low at 2,100.27.
On Wednesday, the Dow closed 3 points lower, practically unchanged at 32,420.06, the S&P 500 fell 21.38 points, or 0.6%, to end at 3,889.14, while the Nasdaq Composite Index fell 265.81 points ended at 12,961.89, down 2% and the Russell 2000 Small Cap Index
lose 51.42 points or 2.4% and end at 2,134.27.
What drove the market?
Major stock indices saw volatile trading gains on Thursday as weekly initial jobless claims hit their lowest level in over a year and gross domestic product rose to 4.3% in the fourth quarter, bringing consensus estimates of 4.1% were exceeded.
Despite the better-than-expected data, investors didn't seem ready to quickly take a bullish stance on the news as stocks fueled early in the morning.
“As we've seen since the last SPX high on March 17th, the market continues to feel directionless as traders and investors seek to determine the main driver for the future. Until then, I expect more volatility and more intraday reversals, ”Randy Frederick, chief executive of trading and derivatives at Charles Schwab, told MarketWatch.
The choppy trading in stock markets this week is partly due to a quarter-end realignment and rotation in and out of sectors that are expected to perform better as the economy recovers more strongly from the COVID-19 pandemic. Schwabs Frederick said the current level of the Cboe Volatility IndexVIX, known as VIX, is implying greater unrest for the markets.
Few strategies have proven successful in recent trades, with both growth stocks and value games having suffered equally in recent trades. "At the current level of around 20, the VIX implies intraday price fluctuations in the SPX of around 41 points per day, even though we have exceeded these for the past three days," he said.
Weekly data showed that the number of people applying for unemployment benefits in the period up to March 20 was 684,000. This marked the first time the number fell below 700,000 since March, when the public health crisis hit the economy significantly. Economists polled by Dow Jones had expected 735,000 applications from 770,000 in the previous period.
The jury understands what this bullish data means for investors. Stocks slipped at the beginning of the session but then rebounded as a rotation from technology stocks to stocks that benefited from the reopening of companies as the introduction of vaccinations caused volatility over the day.
"In reality, a return to normal might already be priced in, and when you consider that half the Fed's mandate is to support employment growth, the signs of the strength of today's unemployment claims may actually have a perverse effect on the broader marketplace to have." wrote Mike Loewengart, managing director of investment strategy at E-Trade Financial, in emailed comments.
However, investors could continue to turn to the Federal Reserve's stated commitment to keep interest rates low until the economy has fully recovered from the pandemic.
"Fed policymakers are still not concerned about the rate hikes so far and, in particular, have chosen not to take the precaution about the pace of yield movement as a precautionary measure (although this may reflect the fact that the bond is the market itself seems to be taking a breather, "wrote Krishna Guha of Evercore ISI in a Thursday note.
On Thursday, Fed Chairman Jerome Powell said the recovery from COVID was taking shape faster than policymakers expected, but stressed that the central bank would only gradually reduce accommodation measures.
"We will, over time, very gradually and with great transparency, when the economy has almost fully recovered, withdraw the support we gave in times of need," Powell told NPR a day after his second day in Congress, explaining the health of the economy after the COVID pandemic.
"Investors continue to ponder recent central banker comments on when emergency incentives might be scaled back, as the Bank of Canada may have hinted earlier recently and Fed Chairman Powell recently hinted that it probably won't be for a while is, "wrote Colin Cieszynski. Chief Market Strategist at SIA Wealth Management.
The moves have also occurred as bond yields fell last week amid growing concerns about prolonged COVID lockdowns in Europe, while the rise in yields so far this year is expected to result in significant stock sales and bond purchases to bring the funds back into balance. Sphia Salim, European interest rate strategist at Bank of America, was quoted in the Financial Times. The BofA estimates that around $ 88 billion will be switched from stocks to bonds.
However, long-term government bond yields this week have fallen significantly against the 10-year benchmark
This equates to a return of around 1.614% compared to 1.729% at the end of last week.
Market participants watched a press conference held by President Joe Biden announcing a new 200 million dose coronavirus vaccination target during his first 100 days in office.
Which stocks were in focus?
SunPower Corp. SPWR said chairman and general manager Tom Werner will leave the company. Stocks closed 2.8% higher.
Chipotle Mexican Grill Inc. CMG announced on Thursday that it had invested in Nuro, an autonomous delivery company. The share gained around 0.6%.
Darden Restaurants Inc. DRI shares rose over 8% Thursday after Olive Garden's parent company reported third-quarter profits and sales that beat the road.
Shares of United Airlines Holdings Inc. UAL rose in premarket trading Thursday after the carrier announced plans to resume more than 20 domestic flights and to fly more than 100% of its pre-pandemic schedule to Latin America. Shares closed 4.1%.
The effectiveness rate from the recent clinical trial of the coronavirus vaccine was slightly decreased from 79% to 76%. US-listed stocks rose 1.9%.
Popular meme stocks GameStop Corp.
rose 53% on Thursday and AMC Entertainment Holdings Inc..
ended up 21.3%.
and google parents alphabet
All executives appeared before a House panel on Thursday to answer questions from lawmakers about the roles of their companies in the discord that led to and followed the January 6 riots at the Capitol, among other things. Facebook stock was down 1.2%, Twitter stock was down 1.4%, and Google stock was flat.
How have other assets performed?
The yield on the 10-year US Treasury Note TMUBMUSD10Y was 0.1 basis points lower, at 1.614%, compared to 1.729% at the end of last week. Yields and bond prices are moving in opposite directions.
The ICE US dollar index DXY, a measure of the currency versus a basket of six major competitors, rose 0.3% to 92.83.
Oil futures were down 4.3% as the cargo ship mishap persisted in the Suez Canal. The US benchmark index CL.1 lost $ 2.62 to trade at $ 58.56 a barrel on the New York Mercantile Exchange.
Gold futures ended lower. The April contract GCJ21 fell 0.5% to end at $ 1,725.10 an ounce.
In Europe, the Stoxx 600 Index SXXP fell less than 0.1% while the London FTSE 100 UKX closed 0.6% lower.
In Asia, the Shanghai Composite SHCOMP fell 0.1%, the Hang Seng Index HSI in Hong Kong fell 0.1% and the Japanese Nikkei 225 NIK closed 1.1%.