Dow Jumps 200 Points: Stocks Hit New Highs After Blowout Big Bank Earnings And Economic Data

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Blowout corporate earnings and a slew of stronger-than-anticipated economic data are lifting stocks to new highs Thursday morning—signaling that the long-awaited economic recovery could be picking up momentum.

Key Facts

Shortly after the market open, the Dow Jones Industrial Average climbed 231 points, or 0.7%, surpassing its latest record high from Friday, while the S&P 500, which last peaked Tuesday, also scored a new high, jumping 0.6%.

Even the recently underperforming Nasdaq jumped 1%, though it’s still about 0.7% off its February high due to rising interest rates this year that have pivoted investors away from high-priced stocks like Tesla, Peloton and Zoom and toward industries like energy and financials that were hit hard by the pandemic.

Among firms heading up gains in the S&P, Citigroup shares are soaring 3% after the New York City-based bank posted better-than-expected revenue and earnings of $19.3 billion and $7.9 billion, respectively, thanks largely to soaring investment bank revenues, which also helped Goldman Sachs pull off “monster” earnings Wednesday.

A slew of other companies surpassed Wall Street estimates with their Thursday morning earnings releases, including Delta Air Lines (up 2%), private equity giant BlackRock (up 2%), Bank of America (down 3%), PepsiCo (up 0.6%) and insurer UnitedHealth (up 3%).

Meanwhile, U.S. retail sales totaled $619.1 billion in March, according to the U.S. Census Bureau, soaring nearly 10% month over month driven by a variety of factors including stimulus checks, an accelerating Covid-19 vaccine rollout and warmer weather, says Vanessa Martinez, a partner at $1.6 billion wealth advisory The Lerner Group.

The labor market is also showing signs of a better-than-expected recovery, with unemployment claims falling to 576,000 last week, nearly 200,000 less than the previous week and marking their lowest level in more than a year, according to the Labor Department on Thursday.

Crucial Quote 

“With a huge, better-than-expected decline in new claims for unemployment assistance, at long last the economic recovery appears to be picking up speed,” Mark Hamrick, a senior economic analyst at Bankrate, said in a Thursday email. The retail sales data, meanwhile, shows that there’s “plenty of pent-up demand in the economy,” Martinez said, with consumer savings rates surging over the past year likely to elevate spending for the rest of this year.

What To Watch For

With big bank earnings largely out of the way, big-tech companies are next on deck to report earnings.  Apple, Facebook and Tesla are among firms due out later this month.

Key Background

Trillions of dollars in fiscal stimulus, accommodative monetary policy and blowout corporate earnings have fueled huge gains for the stock market during the pandemic, and this week’s earnings reports are a sign the latter point could continue as the economy reopens. Meanwhile, Congress is working on another relief package that could inject another $2 trillion into the economy, and the Federal Reserve insists it won’t ease up on its economic support until full-employment and price stability are both met—something still not on the horizon given unemployment of 6%. 

Further Reading

Unemployment Claims Fall To 576,000—Their Lowest Level In More Than A Year (Forbes)

Coinbase Skyrockets In Nasdaq Listing, Landing $105 Billion Valuation On First Day Of Trading (Forbes)

JPMorgan, Goldman And Wells Fargo Post ‘Monster’ $69 Billion In Sales—Shattering Expectations As Stocks Extend Highs (Forbes)

Here’s The ‘Early Warning Sign’ Morgan Stanley Worries About As Stocks Hit Record Highs (Forbes)