U.S. stocks were putting in a mixed performance midday, after data showed first-time applications for unemployment benefits rose last week.
Corporate earnings reports continue to roll in, supporting the recovery in stocks this week, while the European Central Bank offered a dovish tweak to its guidance on interest rates and monetary policy.
- The Dow Jones Industrial Average fell 40 points, or 0.1%, to 34,752.
- The S&P 500 was flat near 4,358.
- The Nasdaq Composite rose 34 points, or 0.2%, to 14,667.
On Wednesday, the Dow Jones Industrial Average rose 286.01 points, or 0.8%, to finish at 34,798, while the S&P 500 advanced 0.8% and the Nasdaq Composite gained 0.9%.
What’s driving the market?
Stocks have rebounded in the past two days from a sharp Monday selloff, with all three major indexes positive on the week as investors put jitters over the spread of the delta variant of the coronavirus that causes COVID-19 behind them.
But Thursday’s U.S. jobs data threatened to undercut the rebound. The Labor Department said initial jobless claims rose by 51,000 to 419,000 in the seven days ended July 17 — the highest level in almost two months. The increase, however, was concentrated in Michigan and Kentucky and likely is tied to the annual retooling of auto plants to build new models while 31 states actually posted declines in jobless benefit claims.
Analysts also said investors may be getting impatient to see signs of improvement in the labor market.
“One data point isn’t a trend, and a one-off can probably be chalked up to delta variant concerns,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “If jobs data doesn’t inflect soon, the markets and the Fed will be put on notice.”
A strong second-quarter corporate earnings reporting season rolls on though, while most U.S. economic data suggests the recovery from the pandemic is intact.
“It seems that concerns over the fast-spreading delta variant of the coronavirus continued to ease, perhaps due to upbeat earnings results, or because…market participants may have had second thoughts over how restrictive any potential new measures could be,” said Charalambos Pissouros, head of research at JFD Group, in a note.
With that in mind, Pissouros said he expects the broader path for stocks to remain positive, with any setbacks likely to trigger more buying, “perhaps on fear of missing out.”
Some analysts are penciling in the potential for further near-term weakness amid weak seasonal factors, stretched valuations, worries that economic growth is peaking, and uncertainty over the spread of the delta variant.
In other U.S. economic data, existing-home sales rose 1.4% to a seasonally adjusted annual rate of 5.86 million in June, the National Association of Realtors said Thursday. Compared with June 2020, home sales were up nearly 22.9%, though the year-over-year comparisons are skewed by the onset of the COVID-19 pandemic last year. The median sales price of an existing home rose 23.4% year-over-year to a record $363,300.
Meanwhile, the U.S. economy grew rapidly in June and is likely to maintain its recent momentum, according to the leading economic indicators. The index increased 0.7% last month, the Conference Board said Thursday.
Which companies are in focus?
- Dow Inc. shares fell 0.7%, after the chemicals company swung to a second-quarter profit and reported revenue that rose above expectations, boosted by sharp local price increases amid stronger demand.
- Netgear Inc. shares tumbled 9.4% after the computer-networking company reported fiscal second-quarter results that fell short of Wall Street forecasts on earnings and revenue.
- Shares of Texas Instruments Inc. were down 4.8%, after its forecasts late Wednesday for the third quarter signaled slowing revenue growth amid a global chip shortage.
- Whirlpool Corp. late Wednesday reported a 32% increase in quarterly sales and said it was boosting its 2021 guidance, citing continued demand for its kitchen and laundry appliances. Shares were down 2.4%.
- AT&T shares edged fractionally lower after the company topped expectations with its latest financial results as the telecommunications giant continued to see low customer churn in its wireless business as well as subscriber growth for the HBO Max service.
- Biogen was up 2.1% after the company beat expectations for the second quarter and disclosed that it’s already sold $2 million of its new, controversial Alzheimer’s disease drug.
- Southwest Airlines Co. shares fell 3.9% after reporting net income of $348 million, or 57 cents a share, in the second quarter, after a loss of $915 million, or $1.63 a share, in the year-earlier period, when travel stalled during the global pandemic.
What did other markets do?
- The yield on the 10-year Treasury BX:TMUBMUSD10Y fell 5 basis points to 1.23%. Yields and debt prices move in opposite directions.
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.1%.
- Oil futures were up, with the U.S. benchmark CL00 up 0.6% at $70.85 a barrel on the New York Mercantile Exchange Gold futures GC00 climbed by $1.30, or 0.2%, to $1,806.30 an ounce on Comex.
- In European equities, the Stoxx Europe 600 index XX:SXXP rose 0.6%, while London’s FTSE 100 UK:UKX slumped 0.4%.
- In Asia, the Shanghai Composite CN:SHCOMP rose 0.3%, and Hong Kong’s Hang Seng Index HK:HSI advanced 1.8%, while Tokyo was closed for a holiday Thursday.