Nasdaq Holding On To Strong Gain But Dow Returns To Negative Territory

After moving to the upside early in the session, the major U.S. stocks indexes have turned mixed over the course of the trading day on Thursday. While the tech-heavy Nasdaq continues to post a strong gain, the Dow has pulled back into negative territory.

Currently, the Nasdaq is up 128.20 points or 1.0 percent at 12,628.76 after reaching a nine-month intraday high. The S&P 500 is also up 16.05 points or 0.4 percent at 4,174.82, but the Dow is down 104.94 points or 0.3 percent at 33,315.83.

Optimism lawmakers will eventually reach an agreement on raising the U.S. debt ceiling contributed to the strength on Wall Street.

Following a meeting earlier in the week, President Joe Biden and House Speaker Kevin McCarthy, R-Calif., both expressed optimism a deal will be reached.

A positive reaction to quarterly results from Walmart (WMT) also generated some buying interest, with the retail giant climbing by 1.1 percent.

The advance by Walmart comes after the company reported better than expected first quarter results and raised its full-year guidance.

Meanwhile, Procter & Gamble (PG) and UnitedHealth (UNH) have come under pressure on the day, contributing to the pullback by the Dow.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 13th.

The report said initial jobless claims slid to 242,000, a decrease of 22,000 from the previous week’s unrevised level of 264,000. Economists had expected jobless claims to dip to 254,000.

The bigger than expected drop came after jobless claims reached their highest level since the week ended October 30, 2021 in the previous week.

A separate report released by the Federal Reserve Bank of Philadelphia showed a continued contraction in regional manufacturing in the month of May, although the pace of contraction slowed by more than expected.

The Philly Fed said its diffusion index for current activity surged to a negative 10.4 in May from a negative 31.3 in April.

While a negative reading still indicates a contraction in regional manufacturing activity, economists had expected the index to show a more modest recovery to a negative 19.8.

The bigger than expected rebound came after the Philly Fed Index dropped to its lowest level since May 2020 in the previous month.

The National Association of Realtors also released a report unexpectedly showing a steep drop in U.S. existing home sales in the month of April.

NAR said existing home sales plunged by 3.4 percent to an annual rate of 4.28 million in April after tumbling by 2.6 percent to a revised rate of 4.43 million in March.

The extended pullback surprised economists, who had expected existing home sales to inch up by 0.1 percent compared to the 2.4 percent slump originally reported for the previous month.

Sector News

Semiconductor stocks continue to see substantial strength on the day, with the Philadelphia Semiconductor Index surging by 2.6 percent to its best intraday level in well over a month.

Micron Technology (MU) is posting a standout gain after announcing plans to invest up to $3.6 billion to bring extreme ultraviolet (EUV) technology to Japan for production.

Computer hardware and software stocks also continue to turn in strong performances, contributing to the advance by the tech-heavy Nasdaq.

Retail stocks have also moved notably higher following Walmart’s upbeat results, driving the Dow Jones U.S. Retail Index up by 1.2 percent.

On the other hand, gold stocks have moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 3.0 percent.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for June delivery tumbling $27.60 to $1,957.30 an ounce.

Significant weakness is also visible among telecom stocks, as reflected by the 1.6 percent drop by the NYSE Arca North American Telecom Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index shot up by 1.6 percent, while China’s Shanghai Composite Index increased by 0.4 percent.

The major European markets also moved to the upside on the day. While the German DAX Index jumped by 1.3 percent, the French CAC 40 Index climbed by 0.6 percent and the U.K.’s FTSE 100 Index rose by 0.3 percent.

In the bond market, treasuries are moving lower for the fifth consecutive session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.7 basis points at 3.648 percent.

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