Nasdaq Shows Significant Rebound, S&P 500 Reaches Nine-Month Closing High

Stocks moved mostly higher during trading on Thursday, with the tech-heavy Nasdaq showing a significant rebound following the sharp pullback seen on Wednesday. With the upward move, the S&P 500 reached its best closing level in well over nine months.

The major averages ended the day just off their highs of the session. The Nasdaq jumped 133.63 points or 1.0 percent to 13,238.52, the S&P 500 climbed 26.41 points or 0.6 percent to 4,293.93 and the Dow rose 168.59 points or 0.5 percent to 33,833.61.

The strength on Wall Street partly reflected easing concerns about the outlook for interest rates following the release of a Labor Department report showing initial jobless claims increased by much more than expected last week.

The Labor Department said initial jobless claims climbed to 261,000 in the week ended June 3rd, an increase of 28,000 from the previous week’s revised level of 233,000.

Economists had expected jobless claims to inch up to 235,000 from the 232,000 originally reported for the previous week.

With the much bigger than expected advance, jobless claims reached their highest level since hitting 264,000 in the week ended October 30, 2021.

While economists noted jobless claims can be volatile around holidays like Memorial Day, the data seems to have added to optimism about the Federal Reserve pausing its interest rate hikes next week.

The Fed, which has previously warned about the impact of labor market tightness, is due to announce its latest monetary policy decision next Wednesday.

Key inflation reports are also likely to be in the spotlight next week, as the data could impact whether the Fed resumes its rate hikes next month.

CME Group’s FedWatch Tool is currently indicating a 73.6 percent chance the Fed will leave rates unchanged next week but a 51.0 percent chance of another quarter point rate hike in July.

Sector News

Retail stocks showed a strong move back to the upside after falling sharply on Wednesday, driving the Dow Jones U.S. Retail Index up by 1.4 percent.

Significant strength was also visible among pharmaceutical stocks, as reflected by the 1.2 percent gain posted by the NYSE Arca Pharmaceutical Index.

Gold, semiconductor and software stocks also saw notable strength on the day, while most of the other major sectors showed more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Thursday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index climbed by 0.5 percent.

The major European markets also finished the day mixed. While the U.K.’s FTSE 100 Index fell by 0.3 percent, the German DAX Index inched up by 0.2 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries have moved to the upside over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.1 basis points at 3.733 percent.

Looking Ahead

A lack of major U.S. economic data may lead to light trading activity on Friday, as traders look ahead to next week’s Fed meeting and inflation data.

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