U.S. stocks closed sharply higher on Thursday, driven by a rally in tech stocks and a fresh batch of impressive earnings results that offset weak economic data. All the three benchmark indexes hit their highest levels in six weeks to end in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) climbed 0.5% or 162.06 points to end at 32,036.90 points.
The S&P 500 rose 1% or 39.05 points to close at 3,998.95 points. Consumer discretionary, healthcare, materials and tech stocks were the best performers.
The Health Care Select Sector SPDR (XLV) gained 1.6%, while the Consumer Discretionary Select Sector SPDR (XLY) jumped 2.3%. The Technology Select Sector SPDR (XLK) and the Materials Select Sector SPDR (XLB) each added 1.4%. Nine of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq added 1.4% or 161.96 points to finish at 12,059.61 points.
The fear-gauge CBOE Volatility Index (VIX) was down 3.22% to 23.11. Advancers outnumbered decliners on the NYSE by a 1.77-to-1 ratio. On Nasdaq, a 1.52-to-1 ratio favored advancing issues. A total of 10.58 billion shares were traded on Thursday, lower than the last 20-session average of 11.63 billion.
Tech Stocks Drive Rally
It has been a good week so far and all three major indexes are likely to end the week in the green after a long time. Investors have regained some of their lost confidence as the earning’s season so far has been good. Stronger-than-expected quarterly results from a slew of companies have offset weak economic data released this week, which still indicates a slowing economy.
Around 18% of the S&P 500 companies have reported their quarterly earnings, with 71% of them beating expectations. As investors regained their lost confidence, they bet on tech stocks, which have largely been responsible for this week’s rally.
It wasn’t any different on Thursday. Shares of Apple Inc.
AAPL
and Amazon.com, Inc.
AMZN
each gained 1.5%.
Consumer discretionary stocks were the biggest gainers in the S&P 500. This saw shares of Spectrum Brands Holdings, Inc.
SPB
gain 1.2%, while Electronic Arts Inc.
EA
added 2.1%.
Tesla Impresses, ECB Hikes Rate
Tesla, Inc.
TSLA
was largely responsible for the S&P 500 rally as its shares finished higher by 9.8% after the electric carmaker posted robust quarterly results. Tesla reported second-quarter 2022 earnings of $2.27 per share, surpassing the Zacks Consensus Estimate of $1.82 per share. Tesla has a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Meanwhile, the European Central Bank (ECB) hiked benchmark interest rates by 50 basis points for the first time in 11 years. Following the surprise move by the central bank, the dollar declined. A weakening dollar could help shares of tech companies get a boost as several tech companies make a large portion of their revenues from outside the United States.
This further lifted the morale of the investors on Thursday, sending the beaten-down tech stocks on a rally. However, investors are still concerned about Fed’s next move and are assessing the extent of the next rate hike, which will give a clearer futuristic view of the country’s economy.
Economic Data
In economic data released on Thursday, the Labor Department said that initial jobless claims totaled 251,000 for the week ending Jul 16, increasing 7,000 from the previous week’s revised level of 244,000. This is also the highest level since Nov 2021. The four-week moving average also increased to 240,500, an increase of 4,500 from the previous week’s revised average of 236,000.
Continuing claims came in at 1,384,000, an increase of 51,000 from the previous week’s revised level. The previous week’s numbers were revised up by 2,000 from 1,331,000 to 1,333,000. The 4-week moving average was 1,353,250, an increase of 13,250 from the previous week’s revised average of 1,340,000.
In a separate report, the Conference Board said that the Leading Economic Index declined 0.8% in June to 117.1 after falling 0.6% in May. This is the index’s fourth straight monthly decline.
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