Wall Street closed higher on Thursday in a light day of trading. The general mood was buy-the-dip as the market went in for a year-end rally. Economic data showed jobless claims rising even as the labor market remained resilient. All three major indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.1% or 345.09 points to close at 33,220.8 points. Twenty-eight components of the 30-stock index ended in positive territory, while two ended in the negative.
The S&P 500 gained 1.8% or 66.06 points to close at 3,849.28 points. All of the 11 broad sectors of the benchmark index ended in positive territory. The Communication Services Select Sector SPDR (XLC), the Technology Select Sector SPDR (XLK) and the Consumer Discretionary Select Sector SPDR (XLY) increased 2.8%, 2.6% and 2.6%, respectively.
The tech-heavy Nasdaq added 2.6% or 264.80 points to finish at 10,478.09 points, led by large-cap growth stocks.
The fear-gauge CBOE Volatility Index (VIX) decreased 3.2% to 21.44. A total of 8.8 billion shares were traded on Thursday, lower than the last 20-session average of 11 billion. Advancers outnumbered decliners on the NYSE by a 4.80-to-1 ratio. On Nasdaq, a 4.30-to-1 ratio favored advancing issues.
Jobless Claims Lead Year-end Relief Rally
Wall Street continues to be in a “bad news is good news” mood after it became amply clear that there was no Santa Claus Rally in the offing. The Fed, in its December meet, sent out signals that accelerated rate hikes would continue well into 2023 till there is sustained and quantifiable evidence that inflation is in control. Recent sessions have been dominated either by the apprehension of an economic downturn rising out of continued monetary policy tightening, or economic indicators suggesting a soft landing for the economy. Thursday’s trade was boosted by economic data, with jobless claims for the week coming in higher.
The Labor Department said on Thursday that initial jobless claims rose to 225,000, increasing 9,000 for the week ending Dec 24, from the previous week’s unrevised level. The four-week moving average decreased to 221,000, marking a fall of 250 from the previous week’s revised average. The previous week’s average was revised down by 500 from 221,750 to 221,250.
Continuing claims came in at 1,710,000 for the week ending Dec 17, increasing 41,000 from the previous week’s revised level. The previous week’s numbers were revised down by 3,000 from 1,672,000 to 1,669,000. The 4-week moving average came in at 1,679,500, an increase of 25,250 from the previous week’s revised average. The previous week’s average was revised down by 3,000 from 1,657,250 to 1,654,250.
The irony remains that investors are currently optimistic as they see an increased number of Americans filing claims for jobless benefits last week. But even as new claims rise and continued claims came in the highest since February, they remain at a level that suggests that the labor market is still tight. This might deter the Fed from going slow in its policy tightening.
However, these jobs numbers certainly did enough on the day to send the market into a much due relief rally in a week that is looking to end more or less flat, that too in the peak holiday season. Crude oil prices fell on the day as COVID cases rose in China, with the mega oil-importer relaxing its pandemic restrictions. However, strong demand in the U.S. market ensured that the energy sector did not suffer for the day. WTI crude fell 0.7% to settle at $78.40/barrel, while Brent settled at $82.26/barrel, down 1.2%. The biggest gainers on the day were communication services, technology and consumer discretionary stocks, in a broad-based relief rally.
Consequently, shares of Apple Inc.
AAPL
and Amazon.com, Inc.
AMZN
rose 2.8% and 2.9%, respectively. Both carry a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Economic Data
For the week ending Dec 23, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.7 million barrels from the previous week. Last week, it had gone down by 5.9 million barrels.
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