S&P 500 gains 1.7% in best day since March after earnings, jobless data top estimates

Stocks gained on Thursday after a slew of earnings results from the big banks topped expectations, and new weekly jobless claims showed a larger-than-anticipated improvement to a pandemic-era low.

The S&P 500 jumped by 1.7% in its best day since March. The Dow gained more than 500 points, or 1.6%. The Nasdaq also rallied by 1.7%, building on Wednesday’s gains as Treasury yields fell further. The benchmark 10-year yield pulled back further to come in below 1.53% after topping 1.62% just earlier this week. 

Bank earnings continued on Thursday with companies including Bank of America (BAC), Wells Fargo (WFC) and Morgan Stanley (MS) posting quarterly results before the opening bell. Bank of America’s profits soared by 58% over last year to $7.7 billion, with this sum boosted by the release of $1.1 billion in credit reserves that had been previously set aside to protect against potential customer defaults. Wells Fargo’s results saw a similar boost from reserve releases, as well as from increased investment banking revenue and consumer credit card-related sales. And Morgan Stanley posted estimates-topping revenue in both its fixed income and equities trading units, with the bank seeing a pick-up in business as market activity related elevated during the quarter. 

As earnings season rolls on in the coming weeks, investor focus will be fixed on companies’ commentary around prices increases, supply chain disruptions and labor challenges. All of these factors have been seen as contributing to an earnings slowdown compared to the second quarter. However, how long-lasting these challenges prove to be, and which companies will ultimately be hit the hardest by these factors, has been a central question for investors. 

At the macro level, inflation has already lasted for months across various pockets of the economy. The Bureau of Labor Statistics’ (BLS) September Consumer Price Index (CPI) rose 5.4% in September compared to last year, coming in at its fastest pace since 2008. A jump in prices for rent, groceries and energy saw especially notable increases. And the BLS’s Producer Price Index (PPI) showed that selling prices for producers increased at an 8.6% annual rate in September, or the fastest rate on record in data spanning back to 2010. 

Policymakers at the Federal Reserve have largely asserted that inflation during the recovery will prove transitory, and will wane as soon as supply bottlenecks ease. However, the string of above-target inflationary readings this year has called into question officials’ views on short-lived price pressures, and contributed to concerns that the central bank may need to act more quickly and aggressively than so far telegraphed to bring inflationary pressures in line. 

“What we are seeing is an economy that continues to run hot,” Jeff Klingelhofer, Thornburg Investment Management’s co-head of investments, told Yahoo Finance Live. “Consumers today still have elevated savings, and they’ll be drawing that down in the months to come. And so really we are absolutely seeing higher wages trickling into the economy … The key to watch will be, as the economy continues to heal, as vaccinations continue to increase and businesses open, whether that trend continues.”

“We’ll be watching those wage numbers exceptionally carefully — they really are the key to trying to figure out where the Fed goes and whether this inflation is transitory in nature,” he added. “But at this point we think it will moderate in the months and quarters to come.”

4:03 p.m. ET: S&P 500 gains 1.7% in best day since March after earnings, jobless data top estimates

Here were the main moves in markets as of 4:03 p.m. ET:

  • S&P 500 (^GSPC): +74.45 (+1.71%) to 4,438.25

  • Dow (^DJI): +534.75 (+1.56%) to 34,912.56

  • Nasdaq (^IXIC): +251.79 (+1.73%) to 14,823.43

  • Crude (CL=F): +$0.96 (+1.19%) to $81.40 a barrel

  • Gold (GC=F): +$3.80 (+0.21%) to $1,798.50 per ounce

  • 10-year Treasury (^TNX): -3 bps to yield 1.5190%

9:30 a.m. ET: Stocks open higher after earnings, economic data top estimates

Here’s where markets were trading shortly after the opening bell Thursday morning:

  • S&P 500 (^GSPC): +42.28 points (+0.97%) to 4,406.08

  • Dow (^DJI): +425.25 points (+1.24%) to 34,803.06

  • Nasdaq (^IXIC): +131.62 points (+0.9%) to 14,702.84

  • Crude (CL=F): +$0.68 (+0.85%) to $81.12 a barrel

  • Gold (GC=F): +$4.80 (+0.27%) to $1,799.50 per ounce

  • 10-year Treasury (^TNX): -2.1 bps to yield 1.528%

8:49 a.m. ET: Producer prices post fastest annual rise in data going back to 2010, though monthly increase comes in cooler than expected

Prices paid to producers in the U.S. economy decelerated in September compared to the previous month, but still held at a historically elevated level relative as inflationary pressures lingered.

The Bureau of Labor Statistics’ Producer Price Index increased at a 0.5% monthly clip in September, slowing from August’s 0.7% rise. Consensus economists were looking for a 0.6% monthly increase in September, according to Bloomberg data.

Excluding more volatile food and energy prices, the monthly deceleration was even more pronounced. The PPI excluding these categories ticked up by just 0.2% during the month, slowing from August’s 0.6% increase. 

Over last year, however, the PPI still grew at a historically rapid rate, though this reflected in large part a bounce off last year’s pandemic-depressed levels of activity. The PPI increased 8.6% in September compared to the same month last year, accelerating compared to August’s 8.3% annual rate and coming in at the fastest pace on record, in BLS data spanning back to 2010. Excluding food and energy prices, the PPI also ticked up in September, growing at a 6.8% rate versus August’s 6.7% increase. 

8:36 a.m. ET: New weekly jobless claims set pandemic-era low

Initial jobless claims broke below 300,000 last week for the first time since the pandemic swept across the U.S. in March of last year. 

New weekly filings totaled 293,000 during the week ended Oct. 9, taking out the previous pandemic-era low of 312,000 from the beginning of September. This also came down markedly from the prior week’s 329,000 new claims, which were upwardly revised by 3,000. Consensus economists expected the latest report to show 320,000 initial unemployment claims, according to Bloomberg data.

Continuing claims also set a fresh pandemic-era low of 2.593 million for the week ended Oct. 2. This compared to 2.727 million during the previous week and the 2.670 million consensus economists were expecting. 

7:32 a.m. ET Thursday: Stock futures jump as bank earnings top expectations 

Here’s where markets were trading Thursday morning: 

  • S&P 500 futures (ES=F): +32.75 points (+0.75%), to 4,387.75

  • Dow futures (YM=F): +229 points (+0.67%), to 34,486.00

  • Nasdaq futures (NQ=F): +126 points (+0.85%) to 14,890.25

  • Crude (CL=F): +$0.97 (+1.21%) to $81.41 a barrel

  • Gold (GC=F): +$6.10 (+0.34%) to $1,800.80 per ounce

  • 10-year Treasury (^TNX): -2.1 bps to yield 1.528%

6:04 p.m. ET Wednesday: Stock futures little changed

Here’s where markets were trading Wednesday evening:

  • S&P 500 futures (ES=F): +1 point (+0.02%), to 4,356.00

  • Dow futures (YM=F): -1 point (-0.00%), to 34,256.00

  • Nasdaq futures (NQ=F): +10 points (+0.07%) to 14,774.25

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 29, 2021. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 29, 2021. REUTERS/Brendan McDermid

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter