Bargain Hunting Contributes To Extended Rally On Wall Street
Stocks moved sharply higher during trading on Thursday, extending the strong upward move seen over the course of the previous session. The tech-heavy Nasdaq posted a particularly strong gain, continuing to recover after ending Tuesday’s trading at its lowest closing level since November 2020.
The major averages pulled back off their highs going into the close but continued to post strong gains. The Dow jumped 516.91 points or 1.6 percent to 32,637.19, the Nasdaq soared 305.91 points or 2.7 percent to 11,740.65 and the S&P 500 surged 79.11 points or 2 percent to 4,057.84.
The strength on Wall Street came as traders continued to pick up stocks at relatively reduced levels following recent weakness.
The major averages have recently fallen to their lowest levels in over a year, but traders seem to be expressing some optimism that the markets have finally found a bottom.
Adding to the positive sentiment, the Labor Department released a report showing first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended May 21st.
The report showed initial jobless claims dipped to 210,000, a decrease of 8,000 from the previous week’s unrevised level of 218,000. Economists had expected jobless claims to edge down to 215,000.
Meanwhile, a separate report from the Commerce Department showed economic activity in the U.S. slumped by slightly more than previously estimated in the first quarter of 2022.
The Commerce Department said real domestic product slid by 1.5 percent in the first quarter compared to the previously reported 1.4 percent drop. Economists had expected the decrease in GDP to be revised to 1.3 percent.
The slightly bigger than expected pullback came after GDP skyrocketed by 6.9 percent in the fourth quarter of 2021.
The National Association of Realtors also released a report showing pending home sales plummeted by much more than expected in the month of April.
NAR said its pending home sales plunged by 3.9 percent to 99.3 in April after tumbling by 1.6 percent to a revised 103.3 in March.
Economists had expected pending home sales to descend by 2.0 percent compared to the 1.2 percent slump originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Sector News
Airline stocks showed a substantial move to the upside on the day, with the NYSE Arca Airline Index soaring by 5.2 percent.
Significant strength was also visible among retail stocks, as reflected by the 4.2 percent spike by the Dow Jones U.S. Retail Index. The index continued to rebound after ending Tuesday’s trading at a two-year closing low.
Dollar Tree (DLTR), Macy’s (M) and Dollar General (DG) all posted standout gains after reporting better than expected quarterly results.
Semiconductor stocks also saw considerable strength on the day, resulting in a 3.9 percent jump by the Philadelphia Semiconductor Index.
Housing, financial, steel and oil service stocks also showed notable moves to the upside amid broad based buying interest.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan’s Nikkei 225 Index dipped by 0.3 percent, while China’s Shanghai Composite Index rose by 0.5 percent.
Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index climbed by 0.6 percent, the German DAX Index and the French CAC 40 Index jumped by 1.6 percent and 1.8 percent, respectively.
In the bond market, treasuries fluctuated over the course of the session before closing nearly unchanged. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 2.756 percent.
Looking Ahead
A report on personal income and spending is likely to be in focus on Friday, as it includes a reading on inflation said to be preferred by the Federal Reserve.
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