fundamental News - DJI5R
Tech shares led U.S. stocks higher Thursday, despite an unexpected jump in jobless claims that resurfaced some concerns about the economy and sent bond yields lower.
The Dow Jones Industrial Average rose 25.35 points, closing at
34,823.35. The S&P 500 climbed 0.2% higher, reaching 4,367.48. The
tech-heavy Nasdaq Composite led the markets with a 0.3% gain, ending the
day at 14,684.60.
Investors jumped back into their favorite tech stocks as optimism
about the sector grows ahead of big earnings reports next week for some
of the largest names in the space. Salesforce gained 2.5% while Amazon
and Facebook climbed 1.4% higher.
“Between interest rates falling, the edge coming off of growth
expectations and the COVID resurgence adding to some of the uncertainty,
tech stocks look like a natural place that investors and traders are
going to gravitate to until we get more resolution
along some of these fronts,” said Yung-Yu Ma, BMO Wealth Management’s
chief investment strategist.
Microsoft rose 1.6% after Citi raised its price target, saying the
tech giant has the potential to beat Wall Street expectations when it
reports quarterly earnings next week. Citi predicted the stock will rise
more than 30% over the next year. Apple rose
almost 1% after Canaccord Genuity said there was “strong demand” for
Apple products ahead of its earnings next week.
The overall market continues to grind higher, led sometimes by
value stocks when economic optimism is high and on days such as
Thursday, tech shares take over the lead.
The Dow is up 0.3% on the week and sits less than 1% from a record high, bouncing back from a 700-point-plus rout on Monday.
Some investors believe that reopening plays will once again come back into favor and tech shares will pull back.
“This economy is still in an incredibly strong rebound, corporate
revenue and profits are increasing sharply, and it’s a pretty positive
backdrop,” said Ron Temple, head of U.S. equities and co-head of
multi-asset investing at Lazard Asset Management.
“That means interest rates in the bond market are too low and if we
start to see the yield curve really steepen, that’s a challenge for the
companies that are driven by growth, that hope they’ll make a profit in
five to 10 years,” like tech stocks.
“That’s a negative headwind for those companies, and it’s probably a
positive story for the stocks traditionally viewed as more value
oriented stocks,” he added.
Stocks were under pressure earlier in the day after jobless claims
unexpectedly rose to 419,000, higher than the 350,000 economists polled
by Dow Jones estimated and more than the upwardly revised 368,000 from
the previous period.
The 10-year Treasury yield ticked lower to 1.265% on the poor jobs
data. The rate dropped to a 5-month low of 1.17% earlier in the week.
Bank stocks, which are typically viewed as cyclical stocks whose
performance is tied to the path of the economy, were down with JPMorgan,
Bank of America and Wells Fargo shedding more than 1% each.
Still, a strong second-quarter earnings reporting season continues,
with American Airlines posting a profit for the period, snapping a
streak of five straight quarters with losses, thanks to the recovery in
travel demand and government aid. The shares
are down 1.1% on Thursday. Similarly, Southwest Airlines reported a
quarterly profit, but the carrier’s stock closed 3.4% lower.
Union Pacific’s shares added more than 1% after the railroad
company reported second-quarter net income of $1.8 billion or $2.72 per
diluted share. That’s up from $1.1 billion, or $1.67 per diluted share
in the year-ago quarter.
CSX jumped nearly 3.5% after the railroad’s second-quarter profit
more than doubled. AT&T shares climbed about 0.4% after earnings and
revenue topped analyst estimates.
Texas Instruments slid 5.3% after the chipmaker topped expectations
for the second quarter, but warned that third-quarter results could
fall short of analysts’ estimates.
Intel, Twitter, Snap and Capital One posted quarterly updates after the market closed.
So far, 15% of the S&P 500 has reported earnings, with 88%
beating earnings estimates, according to Refinitiv. Of the companies
that have reported, 84% have topped revenue expectations.
Expectation today: bullish