U.S. stocks opened higher on Thursday, on track for what could be a fourth day of gains for the Nasdaq Composite and the S&P 500 index
How are stocks trading
Dow Jones Industrial Average
gained 278 points, or 0.9%, at 31,323.
gained 41 points, or 1.1%, to 3,887.
increased 150 points, or 1.4%, to 11,516.
On Wednesday, the Dow Jones Industrial Average
rose 70 points, or 0.23%, to 31038, the S&P 500
increased 14 points, or 0.36%, to 3845, and the Nasdaq Composite
gained 40 points, or 0.35%, to 11362.
What’s driving markets
Technology stocks lead the market higher as investors reacted to the fall in commodity prices over the past month, which has helped to cause a moderation in inflation expectations and a fall in bond yields which has in turn benefitted growth stock valuations.
Even as crude oil prices recovered some ground on Thursday, they remained down nearly 20% over the past month, though energy stocks rallied, reversing some recent losses. Chevron
rose 2.5%, while Exxon
Paul Nolte, a portfolio manager at Kingsview Asset Management, said economic growth fears that have triggered the pullback in commodity prices has inspired a shift in thinking about the Federal Reserve. Investors are increasingly betting that the central bank won’t need to be as aggressive with its interest rate hikes.
“Markets right now are betting that the Fed is going to break and follow the economy, not necessarily inflation,” Nolte said.
Investors will be hoping that the battering delivered to stocks this year means that there is opportunity for the market to be pleasantly surprised when the U.S. second quarter earnings reporting season gets into full swing next week.
Some analysts are wary though.
“Stocks could see a second phase of bear market driven by earnings weakness. A trough is likely to come only when unemployment rates are close to peaking, which could be a year or so from now, ” said Trevor Greetham, head of multi asset at Royal London Asset Management.
“Broad diversification, active tactical asset allocation and disciplined downside risk management will be key to navigate the bumpy road ahead,” he added.
Meanwhile, equity investors appear to have decided that the minutes from the Federal Reserve’s June policy meeting, released on Wednesday, contained little to be concerned about.
Attention will now turn to a speech on Thursday from St Louis Fed president James Bullard, and Friday’s nonfarm payrolls report for fresh clues to the Fed’s policy trajectory. The benchmark 10-year Treasury yield
was up 4 basis points at 2.950%.
Data released Thursday by the Labor Department showed the number of Americans filing new claims for jobless insurance increased by 4,000 last week, while the number of ongoing claims increased by 51,000. Investors are now looking ahead to Friday’s payrolls report for the month of June. Nolte said that stocks might run out of steam later in the session as investors close out their positions ahead of the Friday morning report.
Single stock movers
ON Semiconductor Corp.
was also up on the Samsung news.
Crude oil was firmer. West Texas Intermediate crude
rose 4.5% to climb back above $102 per barrel. The U.S. benchmark lost nearly $10 over the previous two sessions amid worries about easing global demand.
The ICE Dollar Index
was down 0.2% to 106.81. On Wednesday it berached 107 , its highest level in 19 years as worries about the European economy and political turmoil in the U.K. pressured the euro and sterling.
In Europe, the STOXX Europe 600
climbed 1.8%, while the FTSE 100
in London was up 1.2% after U.K media said Prime Minister Boris Johnson would resign. In Asia, the Shanghai Composite
rose 0.3% and the Nikkei 225 index