Following the sell-off seen in the previous session, stocks showed a strong move back to the upside during trading on Thursday. The major averages fluctuated early in the session but climbed firmly into positive territory as the day progressed.
The major averages finished the session near their best levels of the day. The Dow jumped 369.54 points or 1.0 percent to 38,519.84, the Nasdaq surged 197.63 points or 1.3 percent to 15,361.64 and the S&P 500 shot up 60.54 points or 1.3 percent to 4,906.19.
The rebound on Wall Street came as some traders saw the sell-off on Wednesday as a buying opportunity amid optimism the markets will resume the upward trend seen throughout much of January.
While the Federal Reserve’s signals that an interest rate cut in March is unlikely contributed to Wednesday’s nosedive, economists continue to believe it is a matter of “when, not if” the central bank will eventually lower rates.
CME Group’s FedWatch Tool is currently indicating a relatively modest 37.5 percent chance of a March rate cut but a nearly 100 percent chance rates will be lower by early May.
A continued decrease by treasury yields may also have contributed to the buying interest, with the yield on the benchmark ten-year note falling to its lowest levels in over a month.
In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly saw a modest increase in the week ended January 27th.
The Labor Department said initial jobless claims rose to 224,000, an increase of 9,000 from the previous week’s revised level of 215,000. Economists had expected jobless claims to edge down to 212,000 from the 214,000 originally reported for the previous week.
On Friday, the Labor Department is scheduled to release its more closely watched report on employment in the month of January.
Economists currently expect employment to increase by 180,000 jobs in January after jumping by 216,000 jobs in December, while the unemployment rate is expected to inch up to 3.8 percent from 3.7 percent.
Meanwhile, a reading on U.S. manufacturing activity unexpectedly increased in the month of January but continues to indicate contraction, according to a report released by the Institute for Supply Management on Thursday.
The ISM said its manufacturing PMI rose to 49.1 in January from a downwardly revised 47.1 in December. While a reading below 50 still indicates contraction, economists had expected the index to edge down to 47.0 from the 47.4 originally reported for the previous month.
With the unexpected increase, the manufacturing PMI reached its highest reading since hitting 50.0 in October 2022.
Sector News
Gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 3.8 percent.
The rally by gold stocks came amid a modest increase by the price of the precious metal, with gold for April delivery inching up $3.70 to $2,071.10 an ounce.
Considerable strength was also visible among computer hardware stocks, as reflected by the 2.7 percent gain posted by the NYSE Arca Computer Hardware Index.
Retail, airline and housing stocks also showed strong moves to the upside, while banking stocks saw significant weakness, dragging the KBW Bank Index down by 1.7 percent.
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 slid by 0.8 percent, while Hong Kong’s Hang Seng Index rose by 0.5 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slumped by 0.9 percent, the German DAX Index fell by 0.3 percent and the U.K.’s FTSE 100 Index edged down by 0.1 percent.
In the bond market, treasuries moved sharply higher, extending a recent upward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 10.4 basis points to a one-month closing low of 3.863 percent.
Looking Ahead
The monthly jobs report is likely to be in the spotlight on Friday, although trading may also be impacted by reaction to earnings news from Amazon (AMZN), Apple (AAPL) and Meta Platforms (META), which are releasing their quarterly results after the close of today’s trading.
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