Stock market today: S&P 500, Nasdaq surge as wild week on Wall Street continues
08/09/2024 03:16
Stocks rallied on Thursday as a fresh reading on weekly unemployment claims helped calm recession fears.
US stocks took a leap higher Thursday after weekly initial jobless claims fell more than forecast in a reassuring update on the health of the US labor market.
The S&P 500 (^GSPC) rose 2.3%, while the tech-heavy Nasdaq (^IXIC) rallied nearly 2.9%. The Dow Jones Industrial Average (^DJI) was up almost 1.8%, or more than 650 points. Thursday marked the S&P 500's largest one-day gain since November 2022.
The normally routine jobless claim update found itself in the spotlight Thursday amid increasing scrutiny on the labor market, as last week's sluggish non-farm payrolls update served as one of the earliest catalysts of the recent declines.
Government data showed that there were 233,000 initial jobless claims in the week ending Aug. 3, down from 250,000 last week and fewer than what economists had forecast.
The number added a fresh jolt into Thursday's trading. Wall Street saw a comeback attempt falter on Wednesday, as stocks faded into the close and ended up with sizable declines. The moves — from big gains to significant losses — continued a turbulent stretch that has pervaded markets for much of the past week.
In individual movers, "Magnificent Seven" stalwart and AI giant Nvidia (NVDA) was in focus after another back-and-forth day left its stock down another 5%. The stock rose about 6%.
Eli Lilly (LLY) was the highlight of the earnings docket. Shares of the pharmaceutical company soared more than 9% after it boosted its annual revenue and profit forecasts on strong weight-loss drug sales.
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S&P 500 has best day since November 2022
US stocks took a leap higher Thursday after weekly initial jobless claims fell more than forecast in a reassuring update on the health of the US labor market.
The S&P 500 (^GSPC) rose 2.3%, while the tech-heavy Nasdaq (^IXIC) rallied nearly 2.9%. The Dow Jones Industrial Average (^DJI) was up almost 1.8%, or more than 650 points. Thursday marked the S&P 500's largest one-day gain since November 2022. Meanwhile, amid a volatile trading week, the Nasdaq has now moved 1% or more in either direction every day this week.
The normally routine jobless claim update found itself in the spotlight Thursday amid increasing scrutiny on the labor market, as last week's sluggish non-farm payrolls update served as one of the earliest catalysts of the recent declines.
The data added a fresh jolt into Thursday's trading. Wall Street saw a comeback attempt falter on Wednesday, as stocks faded into the close and ended up with sizable declines. The moves — from big gains to significant losses — continued a turbulent stretch that has pervaded markets for much of the past week.
Most US CEOs no longer anticipate a recession in the coming year.
Recession chatter has picked up over the past week as the market reacts to signs of cooling in the labor market.
Goldman Sachs has boosted its odds of a recession to 25% from 15%. JPMorgan's global economics team made a similar move, now saying it sees a 35% chance rather than a 25% chance.
But while the risks to recession have clearly been rising, consensus isn't actually calling for an economic downturn. This was expressed in the latest Conference Board Measure of CEO Confidence released on Tuesday.
In a survey of 130 CEOs conducted from July 15 to July 29, 70% said they do not expect a recession in the next 12 months, a massive flip from this time last year when 80% of respondents said they see a "brief and shallow US recession" in the next 12 to 18 months.
The fundamental case for stocks remains intact
Stocks have whipsawed this week as the Yen carry trade unwound, recession fears rose, and volatility ran rampant in the market.
But under the surface, the long-term case for stocks has been continuing to come in strong this quarter, fueling the bull case for stocks per some on Wall Street. S&P 500 earnings are set to grow more than 11% in the second quarter, marking the mark the highest year-over-year earnings growth rate reported by the index since Q4 2021.
This is part of the reason Evercore ISI's Julian Emanuel is calling the recent pullback a "a buyable correction in a bull market not the end of the bull market."
"Earnings drive stocks in the long term," Emanuel wrote in a note to clients on Thursday. "[Earnings] estimates holding relatively steady for 2024 and 2025, despite some signs of strain in the U.S. economy, bodes well as we head into an historically contentious election."
DataTrek co-founder Nicholas Colas listed corporate earnings as a reason why he's still bullish on the market despite the recent volatility.
"The bottom line here is that both earnings and margins are extremely healthy just now, so US companies should be able to sustain high levels of profitability even if we do see a recession over the next 12 months," Colas wrote in a note to clients on Thursday.
Stocks are ripping higher
Stocks are in rally mode on Thursday, with the Nasdaq Composite up almost 3%.
Chip stocks are leading the charge with Nvidia (NVDA) and Broadcom (AVGO) both up more than 6% and AMD (AMD) up more than 5%.
Elsewhere in tech, every megacap stock is up at least 1%. As seen below, nearly every stock in the Nasdaq 100 is in the green for the day.
Source: Yahoo Finance Some positive signs amid the recent sell-off
Stocks are battling back for gains on Thursday afternoon after what's been a brutal stretch for the market over the past several weeks.
Charles Schwab senior investment strategist Kevin Gordon pointed out that when taking a closer look at what's been falling the most amid the recent pullback, there has been some positives to take away.
Technology (XLK) and Consumer Discretionary (XLY) are the only two sectors lagging the benchmark index since July. Meanwhile, cyclical areas of the market like Energy (XLE) and Financials (XLF), while not soaring by any means, have outperformed the market.
"If [recent market action] was this declaration on the market's part that we were definitively going into a recession and the labor market was falling off of a cliff, I think those areas of the market would be doing much worse."
Instead, Gordon reasons, part of what's at play is a much more natural unwinding of the stock market's most popular trades over the past year.
"The fact that it's more concentrated in a sector like tech at least tells me that it was part of more maybe of an over leveraged or overcrowded trade," Gordon said.
Nvidia climbs 4% as tech leads broader market rebound
Nvidia shares (NVDA) climbed more than 4% Thursday as tech stocks led a market rebound. Wall Street has been bullish on the AI chip heavyweight following a decline of more than 25% from the stock's all-time high of $140.
On Wednesday Piper Sandler analysts pointed investors to a "tremendous opportunity" to buy the AI chip heavyweight and other chip names following sector's recent sell-off.
Several Wall Street analysts have shrugged off a recent report of a possible delay in Nvidia's next generation chip called Blackwell, as the company dominates the AI data center chip sector.
"We still sense an urgent demand across the board, and that mitigates the risk in a pause in shipments as customers wait for the next generation of chips to be available in volumes," New Street Research technology infrastructure analyst Antoine Chkaiban told Yahoo Finance on Thursday.
Chkaiban recently raised the stock to a Buy rating with a price target of $120.
Mortgage rates plunge to lowest level in over a year
Mortgage rates fell to their lowest level in over a year, a positive development for the housing market.
The average rate on the 30-year fixed-rate mortgage dropped to 6.47% from 6.73% last week, Freddie Mac reported on Thursday. A year ago, the average rate on a 30-year fixed-rate loan was 6.96%.
Separately, the average rate for the 15-year fixed mortgage was 5.63%, down from 5.99% a week prior. The rate on a 15-year loan was 6.34% a year ago.
"Mortgage rates plunged this week ... following the likely overreaction to a less-than-favorable employment report and financial market turbulence for an economy that remains on solid footing," Sam Khater, Freddie Mac's chief economist, said in a press release.
"The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move," the economist added.
Expectations that the Federal Reserve will cut interest rates in September have caused long-term bond yields to fall, which in turn has pushed mortgage rates downward.
As a result, more homeowners are taking the opportunity to refinance their loans as rates fall, with applications to refinance a home loan rising 16% last week from the previous week, the Mortgage Bankers Association reported.
Gold, silver, oil jump as commodities get a boost amid market rebound
Commodities jumped on Thursday as a broader rebound in risk assets gained traction.
Gold futures (GC=F) rose more than 1%, sitting solidly above $2,450 per ounce. The precious metal is rebounding from a sell-off of as much as 3% during Monday's global market meltdown sparked by fears of a US recession.
Silver (SI=F) contracts also jumped more than 1% Thursday to trade above $27 per ounce.
Oil futures gained as markets anticipate a retaliation from Iran against Israel after the recent assassination of a Hamas leader in Tehran.
"The retaliation expectations from Iran to Israel have also brought back the Geopolitical fears of tighter supplies. A recovery in the stock market is also easing some recessionary demand fears," Dennis Kissler, senior vice president at BOK Financial said in a Thursday note.
West Texas Intermediate (CL=F) more than 1% to hover near $76 per barrel while Brent (BZ=F) traded close to $78 per barrel.
Goldman Sachs expects home prices to climb amid lower mortgage rates
Goldman Sachs is changing its expectations for home price growth this year as mortgage rates move lower.
Goldman strategists led by Vinay Viswanathan revised up their forecasts for home prices growth this year, expecting prices will now rise 4.5% in 2024, up from 4.2% previously.
The change comes mortgage rates have moved significantly downward. The average rate on a 30-year fixed rate mortgage hit its lowest level since early February last week, according to Freddie Mac. An update on their weekly data will be published later today.
The Federal Reserve is set to cut interest rates starting in September.
But expectations for the Fed to move have already pushed mortgage rates lower, improving affordability while putting more upward pressure on home prices.
"While purchase mortgage applications have yet to respond to lower rates, we think this tailwind will materialize in coming months as rates stay in a lower range," Viswanathan wrote in a note. "Even a small change in mortgage rates can have a material impact on affordability."
Home prices hit a record high in May but price appreciation decelerated from the previous month, according to the S&P CoreLogic Case-Shiller Index.
The lack of housing supply has pushed home prices to new highs even as rates challenge affordability. But with lower rates on the horizon easing the monthly pain for borrowers, Goldman expects headline home prices to keep rising to record highs.
Bitcoin climbs 4% to $58,000
Bitcoin (BTC-USD) climbed more than 4% over the past 24 hours to hover above $58,000 per token.
The cryptocurrency rose along with the overall market as a rebound in risk assets gained traction.
Bitcoin is bouncing back from a rough patch. The world’s largest cryptocurrency recently experienced its worst week since the collapse of Sam Bankman Fried’s FTX crypto exchange in November 2022.
Nasdaq surges 2% as tech stocks lead gains
Tech stocks led a market rebound on Thursday as the Nasdaq (^IXIC) surged to a session high of 2%.
The S&P 500 Technology Select Sector ETF (XLK) rose more than 2% while Healthcare (XLV) gained almost 2%.
Among the tech heavy Nasdaq 100 (^NDX), the 'Magnificent Seven' stocks all rose.
Nasdaq 100 stocks at 10:20 a.m ET on Thursday S&P 500, Nasdaq rise to session highs
The S&P 500 (^GSPC) and the tech-heavy Nasdaq (^IXIC jumped to session highs, each up roughly 1.6% by 10 a.m. ET.
The Dow Jones Industrial Average (^DJI) also gained roughly 1.3%.
Stocks rose Thursday after an attempted comeback faltered in the prior session. The major averages opened in green territory following the latest initial jobless claims reading, giving investors hope that the labor market is in better shape than feared.
Stocks open higher as jobless claims ease worries over US economy
US stocks opened higher Thursday after initial jobless claims fell by the most in nearly a year, helping calm worries of a possible recession.
The S&P 500 (^GSPC) rose about 1%, while those on the tech-heavy Nasdaq (^IXIC jumped more than 1.4%. The Dow Jones Industrial Average (^DJI) was up about 0.4%.
Stocks rose after an attempted comeback fell short Wednesday, when the major averages sank during the session, erasing earlier gains.
Weekly initial jobless claims fell more than forecast. Investors took it as a sign that the labor market may not be in as bad shape as feared. Last week's sluggish nonfarm payrolls update served as one of the earliest catalysts of the recent declines.
Investors were closely watching tech stocks which have led the recent market declines. AI chip heavyweight (NVDA) opened higher after losing more than 5% on Wednesday.
The S&P 500 Tech ETF (XLK), along with Industrials (XLI) and Healthcare (XLV), were the leading sectors in early trading.
Initial jobless claims fall more than forecast, easing some fears about US labor market
Initial filings for unemployment insurance fell more than expected last week, offering some relief to markets worried about further signs of deterioration in the US labor market and the broader economy.
New data from the Department of Labor showed there were 233,000 initial jobless claims filed in the week ending Aug. 3, down from 250,000 the week prior and below the 240,000 economists had expected. In the week ending July 27, jobless claims hit their highest level since August 2023.
Meanwhile, the number of continuing applications for unemployment benefits hit its highest level since November 2021, with 1.875 million claims filed in the week ending July 27, up 6,000 from the week prior.
