Closing Market Update Stocks Extend Gains on Strong Economic Data
Stocks moved broadly higher on stronger-than-expected economic data and earnings from the chip sector.
(Thursday market close) After notching new highs in the wake of the Federal Open Market Committee (FOMC) meeting Wednesday, the Dow Jones Industrial Average® ($DJI), S&P 500® index (SPX), and Nasdaq Composite® ($COMP) extended gains on the heels of stronger-than-expected economic data Thursday.
The Conference Board's December Leading Economic Index® (LEI) snapped a streak of more than 20 monthly declines and exceeded economist estimates after rising 0.1% in February. A 0.2% decline was expected, according to a consensus forecast from Briefing.com. Reports on Initial Jobless Claims, Existing Home Sales, and manufacturing also topped expectations.
Meanwhile, chip stocks were in the spotlight Thursday after Micron Technology (MU) delivered results that topped analyst estimates, sending shares 14.1% higher. Intel (INTC) gained 0.5%, Nvidia (NVDA) rose 1.1%, and the PHLX Semiconductor Index (SOX) gained 2.3%.
"Stocks continue to 'melt up' into all-time high territory following Powell's commentary and the Fed's outlook for three rate cuts this year, despite higher inflation and GDP forecasts," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.
"The timing and number of rate cuts is still in flux and data-dependent, however," he added. "Investors seem to be ok with 'sticky' inflation for now, provided the economy remains firm and investors continue believing the Fed 'intends' to cut rates down the road."
Here's where the major benchmarks ended:
- The S&P 500 index added 16.91 points (0.3%) to 5,241.53; the Dow Jones Industrial Average surged 269.24 points (0.7%) to 39,781.37; the Nasdaq Composite rose 32.43 points (0.2%) to 16,401.84.
- The 10-year Treasury note yield (TNX) was flat at 4.27%.
- The Cboe Volatility Index® (VIX) dropped 0.11 to 12.93.
Industrials, financials, and energy stocks were among the strongest sectors. Utilities and communication services finished modestly lower.
Apple (AAPL) was the biggest loser in the Dow Jones Industrial Average, falling 4.1% on reports the Justice Department filed an antitrust lawsuit against the company. Other widely held stocks were mostly higher: Microsoft (MSFT) added 1%, Meta Platforms (META) gained 0.4%, and Amazon (AMZN) was unchanged on the day.
Stocks on the move
The following companies had stock price moves driven by analyst ratings, quarterly results, or other news:
- Darden Restaurants (DRI) slipped 6.5% after the company reported a decline in same-store sales.
- Five Below (FIVE) lost 15.4% after earnings fell short of analyst estimates.
- Reddit (RDDT), which had an initial public offering (IPO) priced at $34 per share, jumped to $50.44 on its first day of trading Thursday.
- Accenture (ACN)dropped 9.3% after releasing earnings and lowering its full-year outlook for 2024.
- Super Micro Computer (SMCI) notched 8.4% higher to snap a five-day 24.5% skid amid broader gains in the chip sector after Micron Technology's results.
FedEx (FDX), Nike (NKE), and lululemon athletica (LULU) are among the companies reporting after the closing bell Thursday.
Eyeing the economic calendar
The Labor Department reported Initial Jobless Claims of 210,000 for the week that ended March 16, down from 212,000 the previous week. Expectations were for an increase to 216,000.
The Philadelphia Fed Index, a gauge of regional manufacturing activity, came in at a better-than-expected 3.2, and the U.S. Manufacturing PMI®rose to 52.5 in March, which was slightly above expectations.
Lastly, Existing Home Sales jumped to 4.38 million in March, well above economist estimates of 3.9 million. The strong numbers follow better-than-expected housing starts and homebuilder sentiment numbers released earlier in the week.
Thursday's data didn't seem to have much impact on rate expectations. The yield on the 10-year Treasury note was little changed near 4.27%, and the CME FedWatch Tool now shows a 63.5% chance of a quarter-point cut in June, down slightly from 67% Wednesday.
Beyond the handful of earnings due after the closing bell Thursday, there's not much on the calendar to guide trading until a report on New Home Sales is released Monday morning.
Because next Friday is an exchange holiday, just five trading days remain in the first quarter, and starting next week, many investors will review their portfolios and asset allocations before the second quarter begins.
So far this year, the S&P 500 index has surged 10%, the Dow Jones Industrial Average has added 5.7%, and the Nasdaq Composite has climbed 9.3%. The S&P 500's 20 record closes so far this year rank as the sixth highest for a first quarter since World War II, according to Sam Stovall, chief investment strategist at CFRA. In both 2013 and 1998, the index posted 25 record closes in the first quarter.
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