The S&P 500 index and the Nasdaq Composite ended at fresh records Thursday, after data showed weekly jobless benefit claims improved slightly ahead of Friday’s August employment report.
How did stocks trade?
The Dow Jones Industrial Average
closed up 131.29 points, or 0.4%, higher at 35,443.82.
The S&P 500
finished up 12.86 points, or 0.3%, to a record 4,536.95, following an intraday all-time high at 4,545.85.
Nasdaq Composite Index
eked out a gain of 21.8 points, or 0.1%, ending at a record 15,331.18, after setting an intraday all-time trading high of 15,380.07.
What drove the markets?
Stocks were back to setting records Thursday, after weekly initial jobless benefit claims dropped by 14,000 to 340,000 in the week ended Aug. 28, the Labor Department reported Thursday.
The upbeat action comes ahead of Friday’s August employment report, which will give markets their next chance to guess when — and by how much — the U.S. Federal Reserve will begin slowing, or tapering, its program of $120 billion in monthly bond purchases.
“The jobs report is going to be big; it’s always big,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, in a phone interview, adding that a weak payroll report could potentially delay tapering of the central bank’s large-scale purchases, but that’s not the only thing on investors’ minds.
“We know the Fed is going to taper. There’s no doubt about it,” Pavlik said. “What we don’t know is by how much. That’s the question.”
Oxford Economics’ economists Nancy Vanden Houten and Gregor Daco said they expect jobless claims to continue improving, but will be watching to see if businesses and workers have become more cautious due to the spread of the coronavirus from the delta variant, in a research note.
Fed Chairman Jerome Powell has signaled that the central bank would be watching employment data as it mulls the end of its pandemic-era measures to add liquidity to markets.
On Wednesday, weak numbers from payroll provider ADP’s private-sector employment report and the Institute for Supply Management’s measure of factory jobs underscored the room the U.S. economy still has to grow in terms of employment.
Beyond the Fed, investors were also looking past the economic devastation tied to Hurricane Ida, pegged as the most expensive ever, which made landfall in Louisiana over the weekend, before triggering a state of emergency in New York City and New Jersey early Thursday due to flooding, while also threatening New England with more tornadoes.
“I think there’s still some trepidation about what September and October hold,” Pavlik said. “September often is a very hard month for the stock market, and I think that’s on the back of peoples’ minds.”
Should a correction hit stocks, Pavlik thinks investors will buy, since many have been “waiting for bargains,” similar to how shoppers wait for Labor Day and the Thanksgiving holiday sales before buying a new refrigerator or other large appliances.
Stocks briefly pulled back in afternoon trade, with the Nasdaq dipping into in negative territory before finishing at a record high. George Pearkes, macro strategist at Bespoke Investment Group, attributed the action to investors preparing to trade on Friday’s jobs number.
“Sometimes the market is just reacting to noise and that seems like what’s happening today,” said Pearkes. “There is some definite rotation today underneath the surface, out of tech and into other sectors, but we’re not going to have a clear picture of the labor market until September or maybe October as schools reopen and people re-enter the economy.”
In economic data, U.S. factory orders rose 0.4% in July, as manufacturers worked to pump out more goods to keep up with high demand. Economists surveyed by the Wall Street Journal had forecast a 0.3% increase.
U.S. productivity also rose at a revised 2.1% annual pace in the second quarter, a bit lower than the government’s previously reported 2.3% rise from April to June, while a new report showed the U.S. international trade deficit falling from a record high, notching a decline of 4.3% in July to $70.1 billion.
Which companies were in focus
Shares of Toro Co. TTC rose 0.5% Thursday, after the lawn care equipment company reported fiscal third-quarter profit and sales that rose above expectations, as strength in the residential business helped offset a miss in professional, and raised its full-year outlook as strong demand was expected to offset continued supply chain, inflation and labor pressures.
Shares of Nikola Corp. NKLA fell 0.9% Thursday, after the electric commercial truck maker announced agreements with the Germany-based Bosch Group of companies for Nikola Class 7 and Class 8 fuel-cell electric vehicles (FCEVs).
Manulife Financial Corp. MFC said Thursday its Hancock Natural Resource Group unit closed its acquisition of 300,000 acres of pine timberland on behalf of the Swedish pension system fund AP3. The stock closed up 0.3%
Shares of American Eagle Outfitters Inc. AEO tumbled 10.2% toward a more than five-month low, after the fashion apparel and accessories retailer reported fiscal second-quarter profit that beat expectations but revenue that rose to a record but came up shy of forecasts.
Shares of Mastercraft Boat Holdings Inc. MCFT closed down 1.6% Thursday, after the recreational powerboat company swung to a fiscal fourth-quarter profit that was well above expectations, as sales tripled to a record, and provided an upbeat full-year outlook.
Baxter International Inc. BAX closed up 4.8% on Thursday after it said it has entered an agreement to acquire fellow medical technology company Hill-Rom Holdings Inc. for $156 a share, in a deal with an enterprise value of about $12.4 billion.
Shares of Hormel Foods Corp. HRL sank 4.6% Thursday, after the branded foods company, which brands include Planters, Skippy and Spam, reported fiscal third-quarter profit that matched expectations, while record revenue beat, but cut its full-year earnings guidance, as the company managed through inflationary pressure and labor availability challenges.
Facebook‘s FB WhatsApp was fined €225 million ($267 million) by Ireland’s Data Protection Commission for breaking data protection rules. Facebook stock fell 1.8%.
Shares of Signet Jewelers Ltd. SIG shot up 5.7% toward the highest price seen during regular-sessions hours since January 2017, after the diamond jewelry retailer swung to a fiscal second-quarter profit that was more than double what was expected, as revenue also beat forecasts, and raised its full-year outlook.
The biggest winner on the meme stock scene Thursday was Clover Health Investments Corp.
which closed up 4.7% despite Citi initiating coverage at a neutral rating and warning investors that the company’s challenges outweigh its opportunities.
How did other assets fare?
The 10-year Treasury note yields
fell less than a basis point to 1.293%
U.S. oil futures ended sharply higher, with West Texas Intermediate crude for October delivery
adding 1.4%, to settle at $69.99 a barrel on the New York Mercantile Exchange.
fell 0.3%, to settle at $1,811.50 an ounce.
In Europe, London’s FTSE 100
closed up 0.2%, while the pan-European Stoxx 600
rose 0.3%; in Paris, the CAC 40
increased 0.1% while Frankfurt’s DAX
Mark DeCambre contributed reporting