Wall Street climbs as yields slip on jobless claims data

By Sruthi Shankar and Shristi Achar A

© Thomson Reuters
Traders work on the floor of the NYSE in New York

(Reuters) – The tech-heavy Nasdaq led gains on Wall Street on Thursday as a dip in Treasury yields supported megacap stocks, though investors remained cautious ahead of inflation data and the Federal Reserve’s policy meeting next week.

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The two-year Treasury yield, which tends to move in step with short-term rate expectations, slipped from one-week highs to 4.5% after a sharp jump in weekly jobless claims signaled a softening labor market.

Traders have priced in a 73% chance of the U.S. central bank holding interest rates at the current 5%-5.25% range during its monetary policy meeting on June 13-14, according to CMEGroup’s Fedwatch tool. However, they see a 50% chance of a rate hike in July.

“Today’s data in terms of higher claims shows that the Fed policy is having a clear effect,” said David Russell, vice president of Market Intelligence at TradeStation.

“There’s a lot of reasons to be optimistic that inflation is coming down, but the Fed is likely to keep a relatively stern tone until they know for sure. So at this point, the Fed wants to take a step back and see if the medicine is working.”

Heavyweight Amazon.com Inc gained 3.0% as Wells Fargo initiated coverage on the company with an “overweight” rating, while Nvidia Corp, Apple Inc and Tesla Inc rose between 0.9% and 3.4%.

GameStop Corp tanked 17.8% as billionaire investor Ryan Cohen took over as executive chairman after the video-game retailer ousted its CEO and posted a bigger-than-expected quarterly loss.

The CBOE Volatility index, also known as Wall Street’s fear gauge, dropped to a fresh pre-pandemic low of 13.73.

The U.S. Labor Department is due to release inflation data on June 13, the first day of the Fed meeting. The numbers are expected to show consumer prices cooled slightly in May but core prices remained sticky.

The benchmark S&P 500 and the tech-heavy Nasdaq closed lower on Wednesday, with megacap stocks leading declines after the Bank of Canada (BoC) surprised markets with a rate hike, indicating that monetary tightening globally was far from over.

At 11:48 a.m. ET, the Dow Jones Industrial Average was up 65.71 points, or 0.20%, at 33,730.73, the S&P 500 was up 15.22 points, or 0.36%, at 4,282.74, and the Nasdaq Composite was up 115.45 points, or 0.88%, at 13,220.35.

Among the 11 major S&P sectors, consumer discretionary led gains, while real estate and material indexes declined after their recent run-up. Banks retreated 1.0%.

Adobe added 4.7% after Piper Sandler raised its prices target on the stock to $500. The Photoshop software maker said it was offering its AI tool “Firefly” to large businesses.

Lucid Group inched up 0.4% after the U.S. luxury electric-vehicle maker’s head of China operations, Zhu Jiang, said the company was preparing to enter the world’s largest auto market.

Declining issues outnumbered advancers by a 1.31-to-1 ratio on the NYSE and a 1.06-to-1 ratio on the Nasdaq.

The S&P index recorded six new 52-week highs and two new lows, while the Nasdaq recorded 38 new highs and 29 new lows.

(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi)

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