Benchmarks turned in mixed performances on Thursday even as jobless claims hit a near 45-year low. Both the Dow and the S&P 500 ended their two-day run of losses to finally eke out gains. Meanwhile, the Nasdaq declined for the fourth straight session, charting out its largest streak of losses in more than a year’s time. Further, investors speculated chances of multiple rate hikes this year.
The Dow Jones Industrial Average (DJI) increased 0.7%, to close at 24,962.48. Also, the S&P 500 rose 0.1% to close at 2,703.96. However, the tech-laden Nasdaq Composite Index closed at 7,210.09, losing about 0.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 7.5% to close at 18.52.
A total of around 6.81 billion shares were traded on Thursday, lower than the last 20-session average of 8.44 billion shares. Advancers outnumbered decliners on the NYSE by a 1.09-to-1 ratio. On Nasdaq, a 1.41-to-1 ratio favored declining issues.
Dow and S&P 500 Post Gains
The Dow amassed an astounding 165 points to end the day in the green. Earlier in the session, the blue-chip index had surged as much as 300 points. Gains were, however, pared after rate hike fears played on investors’ sentiments.
The S&P 500, on the other hand, inched up 2.6 points to end in positive territory. Of the 11 major segments of the S&P 500, nine ended in the green, with real estate and energy shares leading the advancers. The Real Estate Select Sector SPDR (XLRE) and the Energy Select Sector SPDR ETF (XLE) surged 1.1% each on Thursday. Energy shares rallied due to a sudden drawdown in U.S. crude inventories.
However, gains for the S&P 500 were pared due to a decline in financial and healthcare stocks. The Financial Select Sector SPDR ETF (XLF) and Health Care Select Sector SPDR ETF (XLV) declined 0.8% and 0.2%, respectively. Interest rate fears also weighed on the broader index.
Nasdaq Declines for the Fourth Successive Session
The Nasdaq shed 8 points to end the session in the negative territory. This marked its longest streak of losses since Nov 4, 2016. The tech-heavy index rose by as much as 0.9% at its session peak.
Such a decline was incurred due to losses for Netflix NFLX and Alphabet GOOGL. Shares of Netflix plunged 1%, whereas that of Alphabet declined 0.4%. Further, iShares Nasdaq Biotechnology exchange-traded fund (IBB) plummeted 0.6% and weighed heavily on the index. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Interest Rate Fears Loom Large
At the end of the Federal Open Market Committee (FOMC) meeting on Wednesday, Fed officials stated that most members had revised their economic growth projections upward from the last meeting in December. Officials also stated that continuing economic expansion and rising inflation would warrant a gradual increase in interest rates in the future.
Mixed signals from the Fed at the end of its policy meeting on Wednesday led to a surge in yield on the benchmark 10-year Treasury note, which rose to a 4-year high at above 2.95%. This surge in yields in turn weighed heavily on equities paring gains notched up earlier in the session.
Such fears continued weighing on the markets on Thursday as investors speculated that the Fed would raise interest rates three times this year, which is expected to begin from March when the committee members next meet.
Jobless Rate at a Near 45-Year Low
Initial jobless claims came in at 222,000 for the week ended Feb 17 — its second-lowest level since the Great Recession, below the consensus estimate of 230,000. This also marks a near 45-year low for the metric.
Further, monthly average of claims declined 2,250 to 226,000. Such a decline occurred due to a steep decline in jobless claims across all states even as the labor market remains tight and unemployment lingers at a 17-year low.
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