Following the sharp pullback seen late in Wednesday’s session, stocks showed a strong move back to the upside during trading on Thursday. The major averages all moved notably higher, largely offsetting yesterday’s steep losses.
The major averages saw further upside going into the close, reaching new highs for the session. The Dow advanced 322.35 points or 0.9 percent to 37,404.35, the Nasdaq surged 185.92 points or 1.3 percent to 14,963.84 and the S&P 500 jumped 48.40 points or 1.0 percent to 4,746.75.
The rebound on Wall Street came as some traders saw the sharp pullback seen late in the previous session as a buying opportunity amid expectations the markets will see further upside.
Positive sentiment was also generated in reaction to revised Commerce Department data showing consumer prices increased by less than previously estimated in the third quarter.
The Commerce Department said the surge in consumer prices in the third quarter was downwardly revised to 2.6 percent from 2.8 percent.
The increase in core consumer prices, which exclude food and energy prices, was also downwardly revised to 2.0 percent from 2.3 percent.
The revised inflation data was included in a report showing the spike in gross domestic product in the third quarter was downwardly revised to 4.9 percent from 5.2 percent. Economists had expected the pace of GDP growth to be unrevised.
“While third quarter GDP was revised slightly lower, the bigger news was the downward revisions to both headline and core PCE inflation, both of which showed faster progress toward the Fed’s 2% target,” said Michael Pearce, Lead US Economist at Oxford Economics.
He added, “That helps vindicate the Fed’s dovish shift in messaging, and, if sustained, opens the door to earlier rate cuts than our current September forecast.”
A separate report released by the Labor Department on Thursday showed a slight uptick by initial jobless claims in the U.S. in the week ended December 16th.
The Labor Department said first-time claims for U.S. unemployment benefits crept up to 205,000, an increase of 2,000 from the previous week’s revised level of 203,000.
Economists had expected jobless claims to rise to 215,000 from the 202,000 originally reported for the previous week.
The Federal Reserve Bank of Philadelphia also released a report showing regional manufacturing activity unexpectedly contracted at an accelerated rate in the month of December.
Sector News
Semiconductor stocks saw substantial strength on the day, resulting in a 2.8 percent surge by the Philadelphia Semiconductor Index.
Micron Technology (MU) led sector higher, spiking by 8.6 percent after reporting better than expected fiscal first quarter results and providing upbeat fiscal second quarter guidance.
Significant strength was also visible among airline stocks, with the NYSE Arca Airline Index soaring by 2.7 percent to its best closing level in over four months.
Computer hardware, networking and steel stocks also saw considerable strength, moving back to the upside along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday, although Chinese stocks bucked the downtrend. While China’s Shanghai Composite Index climbed by 0.6 percent, Japan’s Nikkei 225 Index tumbled by 1.6 percent and South Korea’s Kospi slid by 0.6 percent.
The major European markets also moved to the downside on the day. While the French CAC 40 Index edged down by 0.2 percent, the U.K.’s FTSE 100 Index and the German DAX Index both dipped by 0.3 percent.
In the bond market, treasuries moved lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.7 basis points to 3.894 percent after hitting a nearly five-month intraday low of 3.829 percent.
Looking Ahead
Trading on Friday may be driven by reaction to a Commerce Department report on personal income and spending, which includes readings on inflation said to be preferred by the Federal Reserve.
For comments and feedback contact: editorial@rttnews.com