U.S. stocks are nearing their best day since February on Thursday after a better-than-expected unemployment report eased concerns about a slowing economy.
The S&P 500 rose 1.8 percent in afternoon trading, a day after an earlier big gain fizzled out and turned into a loss. The Dow Jones Industrial Average was up 518 points, or 1.3 percent, as of 12:50 p.m. Eastern time, and the Nasdaq Composite was 2.3 percent higher, with Nvidia and other Big Tech stocks leading the way.
US Treasury yields also rose in the bond market, a sign that investors are less worried about the economy after a report showed that fewer US workers filed for unemployment benefits last week, a figure better than economists had expected.
Exactly a week ago, worse-than-expected unemployment data fueled concerns that the Federal Reserve had kept interest rates too high for too long to fight inflation, slowing the economy. That sent markets reeling, as did a rate hike by the Bank of Japan that sent shockwaves around the world and disrupted a popular trade for some hedge funds.
At its worst, at least so far, the S&P 500 was about 9% below its record high last month. Such declines are not uncommon on Wall Street, and 10% “corrections” occur about every one to two years.
What made this decline particularly scary was how quickly it happened. A measure of how much investors are paying to protect themselves against future declines in the S&P 500 briefly rose to its highest level since the COVID crash of 2020.
Still, according to strategists at BNP Paribas, the market swings are more akin to a “positioning-induced crash” caused by too many investors entering similar trades and then exiting them together, rather than the start of a long-term downmarket following a recession.
They say the crisis is more similar to the “flash crash” of 2010 than the global financial crisis of 2008 or the pandemic-induced recession of 2020.
Of course, despite all long-term forecasts, there were rapid market changes last week.
“Today’s unemployment data may ease some of the concerns raised by last week’s weak jobs report,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade. “But with inflation data due next week and the stock market still enduring its biggest decline of the year, it’s unclear how much this will affect sentiment.”
Meanwhile, major US companies continue to present earnings reports for the spring, most of which are better than analysts expected.
Eli Lilly rose 8.2 percent, leading the market, after the company reported higher earnings and revenue than Wall Street expected. Sales of its diabetes drug Mounjaro and its weight-loss counterpart Zepbound are booming, and the company raised its financial forecast for the year.
Shares of major technology companies also rose, reversing some of their steep losses from last month. After a handful of them almost single-handedly drove the S&P 500 to dozens of all-time highs this year, the group known as the Magnificent Seven lost momentum last month as their prices rose too high amid investor enthusiasm for artificial intelligence.
The performance of this handful of stocks has additional implications for the S&P 500 and other indexes, as these companies are by far the most valuable on the market. Nvidia, which has become the poster child for AI trading, rose 4.5%, cutting its loss for the week so far to 4%. It was the day’s single strongest force driving the S&P 500 higher.
Increases of 1 percent at Microsoft and 1.6 percent at Apple and Eli Lilly were also important growth drivers.
They helped offset a 12.1 percent decline at McKesson, which beat analysts’ earnings expectations last quarter but fell short of expectations on revenue. The company said growth in its medical-surgical business had slowed.
Bumble, the Texas-based dating app, lost nearly a third of its value, or 31.8%, after its third-quarter revenue forecast fell well short of Wall Street’s.
In the bond market, the yield on 10-year Treasuries rose to 4.00% from 3.95% late Wednesday.
On foreign stock markets, indices in Asia and Europe showed mixed results. In Japan, where some of the wildest market moves took place, the Nikkei 225 lost 0.7%, looking like a small wave after the sharp fluctuations of 12.4% down and 10.2% up at the start of the week. ___
AP business writers Yuri Kageyama and Matt Ott contributed.
