Stocks rise as jobless claims come in near estimates

Stocks reached record levels on Thursday as investors digested more quarterly earnings results and new data on the labor market’s recovery. 

The S&P 500 advanced to log a record closing high. Both of the Dow and Nasdaq also ended higher, with shares of cyclical energy and financial stocks, as well as travel- and leisure-related firms contributing heavily to the gains.

Some of the closely watched companies that recently reported earnings results disappointed relative to Wall Street’s consensus estimates, punctuating what has otherwise been an exceptionally strong second-quarter earnings season. Ride-hailing giant Uber (UBER) posted a wider-than-expected adjusted EBITDA loss for the second quarter, a day after smaller rival Lyft (LYFT) unexpectedly reported an adjusted profit during the same period. And shares of Etsy (ETSY) sank after the company delivered a current-quarter sales forecast that came in short of estimates, vindicating many traders’ fears over a sharp slowdown in e-commerce growth during the second half of this year.

Aside from these blips, however, most major companies have posted second-quarter results that exceeded estimates. As of last Friday, 59% of S&P 500 companies had posted results, and 88% of these had beaten Wall Street’s earnings per share estimates, according to FactSet’s latest data. The expected earnings growth rate for S&P 500 companies is tracking toward 85.1%, which would be the biggest jump since the fourth quarter of 2009.

“The near-term power behind the market is insanely strong earnings. There’s very little sign that they’re not going to continue to be strong through the end of the year and into next year,” Jonathan Golub, chief U.S. equity strategist for Credit Suisse, told Yahoo Finance on Wednesday. “But you are starting to see maybe cracks on the edge, if you will, that are making this a little more difficult. And where it’s showing up is not in the market overall, but in the sectors and the groups of stocks and that leadership, and there’s a bit more rotation going on there.” 

Over the past month, defensive sectors including utilities and healthcare have outperformed as concerns over the spread of the Delta variant resurged. For the year-to-date, however, the cyclical sectors of the S&P 500, including energy and financials, have remained the major outperformers, consistent with investors’ convictions that this year would be one of recovery for the broader economy relative to last year’s lows. 

Interest rates also dipped again on Wednesday, with the benchmark 10-year yield briefly reaching the lowest level in six months at under 1.13%. The move lower coincided with more concerning signals on the pace of the economic recovery, with private payrolls rising by just 330,000 in July, or less than half the consensus estimate, according to ADP’s latest monthly report on Wednesday. Still, however, over recent data have been more positive, with the Institute for Supply Management’s July services index jumping to a record high even as company survey respondents cited ongoing supply chain disruptions and shortages. 

“We’ve got some difficulty in logistical challenges, we have some inflation that’s causing some indigestion at the moment,” Michael Vogelzang, Captrust chief investment officer, told Yahoo Finance on Wednesday. “But specifically the Delta variant of COVID-19 is actually potentially positive for the stock and bond markets, mostly because yes it may induce a bit of a slower economy, but frankly the economy is booming and it wouldn’t be the end of the world to slow it down a bit. But it also might give the central banks around the world a little more cover to continue to provide some more liquidity than what I think the market’s been expecting. That could actually accelerate or extend some of the bull market action.” 

4:01 p.m. ET: Dow rises more than 270 points; S&P 500 hits record at market close

Here were the main moves in markets as of 4:01 p.m. ET:

  • S&P 500 (^GSPC): +26.47 (+0.60%) to 4,429.13

  • Dow (^DJI): +271.58 (+0.78%) to 35,064.25

  • Nasdaq (^IXIC): +114.58 (+0.78%) to 14,895.12

  • Crude (CL=F): +$0.97 (+1.42%) to $69.12 a barrel

  • Gold (GC=F): -$6.90 (-0.38%) to $1,807.60 per ounce

  • 10-year Treasury (^TNX): +3.3 bps to yield 1.2170%

3:14 p.m. ET: Stocks hold higher, Dow adds 200+ points

The three major indexes held higher in intraday trading on Thursday, with the Dow adding more than 200 points, or 0.6%. The S&P 500 energy, consumer discretionary and financials sectors led the way higher, while only the healthcare sector was marginally in the red. The blue-chip index came within 10 points of its all-time intraday high of 4,429.97. 

In the Dow, Salesforce, Disney and Amgen led to the upside, with each of these stocks advancing by more than 2%. The Nasdaq outperformed against the other two major indexes, adding more than 0.6% as each of the Big Tech FAANG names Facebook, Amazon, Apple, Netflix and Alphabet gained. 

10:50 a.m. ET: ‘The level of volatility we’re seeing in the market … makes the performance feel somewhat less positive’: Strategist 

So far this year, the S&P 500 has gained more than 17%, extending last year’s gains as more reopenings took place and corporate earnings and economic activity rebounded. However, that march higher has not been fully linear, with brief low-single digit percent pullbacks occurring along the way. 

“It’s quite interesting the level of volatility we’re seeing in the market is such that makes the performance feel somewhat less positive than what one could conclude by just looking at the number of performance year to date,” Simona Paravani-Mellinghoff, global chief investment officer of multi-asset strategies and solutions at BlackRock, told Yahoo Finance. “I would say that [that volatility is] largely the result of the questions on two very important fronts: One side is growth, the other is inflation.” 

“The fundamental question for investors right now is the extent to which the impact of new variants like the Delta may have a meaningful impact on economic growth and on inflation,” she added. “Of course we have seen elevated readings in the U.S.” 

9:30 a.m. ET: Stocks open higher 

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

  • S&P 500 (^GSPC): +11.64 (+0.26%) to 4,414.30

  • Dow (^DJI): +97.67 (+0.28%) to 34,890.34

  • Nasdaq (^IXIC): +24.54 (+0.11%) to 14,804.83

  • Crude (CL=F): +$0.15 (+0.22%) to $68.30 a barrel

  • Gold (GC=F): -$1.10 (-0.06%) to $1,813.40 per ounce

  • 10-year Treasury (^TNX): +1.3 bps to yield 1.197%

9:08 a.m. ET: Trade deficit reaches record high in June, with imports surging to meet demand

The U.S. trade deficit raced to a record high in June as imports surged faster than exports to meet rising consumer demand during the recovery.

The trade deficit yawned to $75.7 billion for June, according to new Commerce Department data on Thursday. This was bigger than the $74.2 billion deficit expected, according to Bloomberg consensus data, and the $71.0 billion gap from May.

Imports rose 2.2% on the month, increasing faster than the 0.6% rise in exports.

“With the peak in consumer goods demand behind us, we expect consumer goods imports to weaken from here, while survey measures of export orders suggest that exports growth is set to strengthen,” Michael Pearce, senior U.S. economist for Capital Economics, wrote in an email. “However, the weak base for exports from June means that, even factoring in stronger gains in exports over the coming months, net trade is likely to remain a drag on GDP growth in the third quarter.”

8:53 a.m. ET: Job cuts tumbled by 93% over last year to reach a 21-year low as labor shortages hit market: Challenger

U.S. employers cut the fewest number of jobs since June 2000 in July, according to a new report Thursday from Challenger, Gray & Christmas, Inc.

Total job cuts were at 18,942 in July, sliding by 93% from the more than 260,000 cuts announced in the same month last year, the firm said in its monthly report. The decline accelerated compared to June, when job cuts were down 88% on a year-on-year basis. Just 153 cuts were attributed to COVID-19 last month, down by 97% compared to the sum attributable to virus-related reasons in January. 

“It remains to be seen what the Delta variant may do to job cuts, if anything. At this point, companies are trying to attract and retain talent, not let them go,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement. 

8:46 a.m. ET: New jobless claims come in at 385,000, roughly in-line with estimates

Initial unemployment claims came in at approximately the expected level last week, totaling 385,000 for the week ended July 31, the Labor Department said Thursday. This compared to consensus estimates for 383,000, based on Bloomberg data.

Continuing state claims fell to a pandemic-era low of 2.93 million, unexpectedly breaking back below the 3 million mark. 

The total number of claimants across all programs also ticked down marginally, according to this week’s report, falling by nearly 200,000 to come in just below 13 million. However, that came even as nearly half of U.S. states phased out federal augmented unemployment benefits this summer ahead of the national expiration date in September, with these states’ leaders hoping the move would incentivize workers to rejoin the labor market.

8:15 a.m. ET: Moderna shares dip despite Q2 sales, earnings beat, with vaccines showing 93% efficacy month after six months 

Shares of Moderna (MRNA) fell in early trading Thursday morning even after the pharmaceutical company posted second-quarter results that handily exceeded consensus estimates, with vaccine deals helping push the company’s results sharply higher compared to last year. 

Shares were down more than 3% ahead of the opening bell, however, though the stock has rocketed higher by more than 300% so far for the year-to-date.

Revenue came in at $4.4 billion for the three months ended in June, rising markedly from the $67 million posted in the same period last year. Earnings per share of $6.46 were better than the $5.82 billion expected, according to Bloomberg estimates, and jumped to a profit from the loss of 31 cents per share posted in the same quarter last year. 

Moderna also announced Thursday that its COVID-19 vaccine showed 93% efficacy six months following a second dose of the inoculation, ticking down just slightly from 94% closely following after the shot. Moderna noted that it had signed $20 billion worth of COVID-19 vaccine agreements for. the rest of the fiscal year, up from $19.2 billion reported three months ago. 

7:17 a.m. ET Thursday: Stock futures extend gains 

Here’s where the markets were trading Thursday morning:

  • S&P 500 futures (ES=F): +7.5 points (+0.17%) at 4,402.25

  • Dow futures (YM=F): +46 points (+0.13%) to 34,736.00

  • Nasdaq futures (NQ=F): +25.5 points (+0.17%) to 15,099.00

  • Crude (CL=F): +$0.14 (+0.21%) to $68.29 a barrel

  • Gold (GC=F): +$0.90 (+0.05%) to $1,815.40 per ounce

  • 10-year Treasury (^TNX): -1.2 bps to yield 1.172%

6:10 p.m. ET Wednesday: Stock futures tick up

Here’s where markets were trading Wednesday evening: 

  • S&P 500 futures (ES=F): +1.25 points (+0.03%) at 4,396.00

  • Dow futures (YM=F): +21 points (+0.06%) to 34,711.00

  • Nasdaq futures (NQ=F): +4 points (+0.03%) to 15,077.5

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

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