Wall Street closed higher on Thursday as strong performance by technology bigwigs more than offset negative effects of weak economic data. Meanwhile, investors remained unanswered when a congressional deal will take place related to the second round of fiscal stimulus. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.2% to close at 27,739.73 reversing its three-day losing streak. Notably, 18 components of the 30-stock blue-chip index ended in the red while 11 finished in green and one remained unchanged.
The tech-laden Nasdaq Composite ended in positive territory to close at 11,264.95, surging 1.1% or 118.49 points. This marked its 35th closing high this year so far. In the intraday trading, the tech-heavy index recorded all-time high at 11,283.42.
Moreover, the S&P 500 gained 0.3% to end at 3,385.51. The Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) gained 1.3% and 1.2%, respectively while the Energy Select Sector SPDR (XLE) tumbled 2.2%. Notably, three out of eleven sectors of the benchmark index closed in positive territory while eight in negative zone.
The fear-gauge CBOE Volatility Index (VIX) was up 0.8% to 22.72. A total of 8 billion shares were traded on Thursday, lower than the last 20-session average of 9 billion. Decliners outnumbered advancers on the NYSE by a 1.54-to-1 ratio. On Nasdaq, a 1.46-to-1 ratio favored declining issues.
Technology Sector Maintains Momentum
Wall Street is witnessing a wonderful performance since Mar 23 solely due to an extraordinary rally of the technology sector in the last four and half months, defying coronavirus-induced economic devastations. Generally, investors opt for safe haven assets like government bonds, gold and high-yielding defensive stocks during severe market volatility. However, it seems that the growth-oriented technology sector has become the new safe haven.
Delay in fresh stimulus and Fed’s gloomy outlook about the U.S. economy compelled investors to opt for technology stocks as this sector has performed the best in the second-quarter 2020 defying the pandemic. Yesterday, shares of Apple Inc. AAPL, Microsoft Corp. MSFT, Facebook Inc. FB, Alphabet Inc. GOOGL and Netflix Inc. NFLX gained 2.2%, 2.3%, 2.4%, 2.1% and 2.8%, respectively. Apple sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Delay in Fresh Fiscal Stimulus
Negotiations between the Republicans and Democrats fell apart. Treasury Secretary Steven Mnuchin said that the Trump administration is ready to further negotiate with Democrats and may provide more money as fiscal stimulus if it was required for an amicable solution.
Mnuchin said that President Trump ” wants to provide money for kids and jobs, a second round of the PPP and to help small businesses cover payroll during the pandemic.” Notably, the unemployment benefit of $600 per week came to an end by the end of July. Meanwhile, new trench of stimulus are unlikely to come before September.
Economic Data
The Department of Labor reported that Initial Jobless Claims grew 135,000 to 1.106 million for the week ended Aug 15. This compares unfavorably with the consensus estimate of 883,000. Moreover, the previous week’s data was revised upward by 8,000 to 971,000. Notably, the previous week was the first week after the outbreak of the pandemic in which weekly jobless claims fell below 1 million.
Continuing Claims — those who have collected benefits for two straight weeks — were reported at one week lag. This data decreased by 636,000 to 14.844 million. The previous week’s continuing claims were revised 6,000 lower to 15.48 million.
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