Stocks rose, shaking off the prior day’s steep declines after new economic data showed a bigger dip in new unemployment claims than expected.
Each of the S&P 500, Dow and Nasdaq gained more than 1% intraday on Thursday after logging their biggest drops since October on Wednesday. The Dow outperformed with a jump of more than 600 point, or 2%, led by shares of Walt Disney and Intel.
Weekly unemployment claims pulled back by 67,000 from the prior week’s elevated levels, dipping below 900,000 for the first time in three weeks. Still, new claims remained historically high compared to pre-pandemic levels.
Other economic data disappointed on Thursday, however. U.S. gross domestic product (GDP) grew for a second straight quarter in the final three months of 2020, albeit with slowing momentum heading into the new year, largely as a result of weakening consumer spending. All told, the U.S. economy contracted at a 3.5% annualized rate in 2020, for the biggest drop since 1946.
A day earlier, the Federal Open Market Committee issued a January monetary policy statement that pointed to moderating growth in the virus-stricken economy. Still, the central bank reiterated its commitment to keeping interest rates low and asset purchases robust as the economy weathers the COVID-19 pandemic.
“It was a positive from the standpoint of reinforcing the dovishness of the Fed that they indicated that economic growth and activity is moderating,” Tony Rodriguez, Nuveen head of fixed income, told Yahoo Finance of the Fed’s statement and Fed Chair Jerome Powell’s press conference. “Acknowledging that reinforces the idea that they’re going to be very patient, certainly with the policy rate, but also from the standpoint of quantitive easing, balance sheet growth and the talk of a taper. That is definitely not a 2021 conversation that they are willing or expecting to have.”
Earnings season has also been chugging along, and shares of some heavily weighted companies that reported results after the closing bell on Wednesday dipped. Tesla’s (TSLA) stock dropped more than 5% after the company posted profit that fell short of estimates, though revenue hit a quarterly record of more than $10 billion. Apple’s (AAPL) stock fell after CEO Tim Cook said during the company’s earnings call that he expected a second-quarter deceleration in wearables and services sales growth, overshadowing fiscal first-quarter revenue and earnings that topped expectations. Facebook (FB) shares gained, however, after the company topped user growth, sales and profit estimates, but warned about “significant uncertainty” over the ad environment in 2021 amid the pandemic.
Shares of some of the heavily shorted stocks that had been rocketing higher over the last several sessions were mixed. GameStop (GME) more than doubled on Wednesday but slid on Thursday, triggering a trading halt. Shares of AMC (AMC) sank 32%, following an extraordinary run-up of 300% during Wednesday’s regular trading day. BlackBerry (BB), Express (EXPR) and Bed Bath & Beyond (BBBY) – also darlings of Reddit’s r/wallstreetbets forum as of late – also declined.
“This will work until it doesn’t,” Jeff Sherman, DoubleLine Capital chief investment officer, told Yahoo Finance on Wednesday. “It’s this concentrated fervor that’s going into single names, and so I don’t think it has ramifications for the broad market. But this is exactly what we talk about when we talk about blow-off tops in market, euphoria.”
4:09 p.m. ET: Stocks jump, Dow adds 300 points, or 1%, to recover after worst session in three months
Here were the main moves in markets as of 4:09 p.m. ET:
S&P 500 (^GSPC): +36.61 (+0.98%) to 3,787.38
Dow (^DJI): +300.19 (+0.99%) to 30,603.36
Nasdaq (^IXIC): +66.56 (+0.50%) to 13,337.16
Crude (CL=F): -$0.57 (-1.08%) to $52.28 a barrel
Gold (GC=F): -$4.20 (-0.23%) to $1,844.70 per ounce
10-year Treasury (^TNX): +4.3 bps to yield 1.0570%
1:25 p.m. ET: GameStop ‘is just the symptom, not the disease’: Portfolio manager
GameStop’s massive run-up was only the tip of the iceberg when it came to retail investors and online traders upending positions held by many Wall Street firms, one portfolio manager told Yahoo Finance.
“GameStop is just the symptom, it’s not the disease. If you look at the top 50 names that are shorted, they have the same pattern of stock price run-up that we really saw with GameStop,” Barry James, James Investment Research portfolio manager, told Yahoo Finance on Thursday. “It’s just one of a number. Again, using these social media sites to help push things forward, I view it as kind of the old boiler rooms, you know, Wolf of Wall Street as you were, and it’s ‘pump and dump.’ Folks, they already own it, and they’re trying to push the price up. So I don’t know that there’s anything that unusual about it.”
“These companies taking their stands on their own to reduce clients’ ability to trade I think is a wrong move, you want freedom and liquidity for all clients, and if I were in that position I’d be very upset as well,” he added.
11:50 p.m. ET: Stocks extend gains, banks and utilities outperform
The three major indexes held sharply higher in intraday trading on Thursday, with both the Dow and S&P 500 adding more than 1.5%. The Nasdaq lagged as Big Tech companies including Apple and Tesla fell. In the S&P 500, the utilities, financials and healthcare sectors outperformed, though each of the 11 major sectors were in the green.
Here were the main moves in markets, as of 11:50 a.m. ET:
S&P 500 (^GSPC): +66.67 points (+1.72%) to 3,815.44
Dow (^DJI): +577.75 points (+1.91%) to 30,880.92
Nasdaq (^IXIC): +133.9 points (+1.01%) to 13,405.14
Crude (CL=F): -$0.36 (-0.68%) to $52.49 a barrel
Gold (GC=F): +$8.10 (+0.44%) to $1,857.00 per ounce
10-year Treasury (^TNX): +3.4 bps to yield 1.048%
10:04 a.m. ET: New home sales jumped less than expected in December, but recovered from November decline
New home sales increased only 1.6% in December from November, the Commerce Department reported on Thursday, missing consensus economists’ expectations for a 3.5% jump. Still, this marked the first month-over-month rise in new home sales since July, and represented a rebound from November, when new home sales slid 12.6%.
The increase brought new home sales to a seasonally adjusted annual rate of 842,000 in December, moderating compared to the massive 979,000 rate seen in July.
10:00 a.m. ET: American Airlines shares surge as Reddit-fueled interest pushes shares higher despite mixed 4Q results
American Airlines (AAL) saw shares surge more than 20% on Thursday as Reddit users speculated the beaten-down stock could become another GameStop, with small-time traders pushing back against major Wall Street investors’ short positions.
Earlier Thursday, the company reported mixed fourth-quarter results that reflected the ongoing hit to travel from the COVID-19 pandemic. Operating revenue of $4.03 billion fell 64% over last year, but beat expectations for $3.86 billion, according to Bloomberg data. And adjusted losses were $3.86 per share, also narrower than the $4.11 loss per share anticipated. Daily cash burn came in at $30 million in the fourth quarter.
However, for the first quarter, American Airlines expects revenue to stay down by between 60% to 65%, holding roughly unchanged from the prior period.
9:54 a.m. ET: Robinhood bans users from buying GameStop after massive run-up
Trading platform Robinhood shut down the feature allowing users to purchase shares of GameStop on Thursday, following a massive run-up this week fueled by chatter in the Reddit forum r/wallstreetbets. Searches for GameStop’s “GME” ticker also did not show GameStop as a result, and searches for other heavily shorted stocks that had become popular among online traders this week including AMC, BlackBerry and Nokia also showed as blank in the app.
9:33 a.m. ET: Stocks open higher
Here were the main moves in markets, as of 9:33 a.m. ET:
S&P 500 (^GSPC): +27.83 points (+0.74%) to 3,778.60
Dow (^DJI): +263.94 points (+0.87%) to 30,567.11
Nasdaq (^IXIC): +67.27 points (+0.53%) to 13,345.38
Crude (CL=F): +$0.52 (+0.98%) to $53.37 a barrel
Gold (GC=F): +$12.00 (+0.65%) to $1,860.90 per ounce
10-year Treasury (^TNX): +2.8 bps to yield 1.042%
8:44 a.m. ET: 4Q GDP comes in slightly below expectations, weekly jobless claims improve
New economic data out Thursday morning painted a mixed picture of the U.S. economy.
Fourth-quarter gross domestic product, tracking economic activity in the final three months of 2020, expanded at a 4.0% annualized clip, falling short of the 4.2% increase expected, according to Bloomberg data. This followed a record 33.4% annualized increase in the third quarter, which in turn had followed a record plunge in the second quarter. Personal consumption increased at an only 2.5% annualized rate, or well below the 3.1% expected. All told, gross domestic product remained below pre-pandemic levels from the fourth quarter of 2019.
Meanwhile, weekly jobless claims for the week ended January 23 improved to 847,000, beating estimates for 875,000. However, the previous week’s new claims were revised up to 914,000 from 900,000. Continuing claims, measuring the total number of individuals still receiving state benefits, fell below 5 million for a back-to-back weeks and reached the lowest level since mid-March.
7:25 a.m. ET: Thursday: Stock futures point to a mixed open ahead of GDP, jobless claims data
Here were the main moves in markets, as of 7:25 a.m. ET Thursday:
S&P 500 futures (ES=F): 3,745.75, down 1.5 points or 0.04%
Dow futures (YM=F): 30,247.00, up 58 points, or 0.19%
Nasdaq futures (NQ=F): 13,048.5, down 57 points or 0.43%
Crude (CL=F): -$0.07 (-0.13%) to $52.78 a barrel
Gold (GC=F): -$6.50 (-0.35%) to $1,842.40 per ounce
10-year Treasury (^TNX): unchanged, yielding 1.0140%
6:03 p.m. ET Wednesday: Stock futures open lower
Here were the main moves in markets, as of 6:03 p.m. ET Wednesday
S&P 500 futures (ES=F): 3,735.5, down 8.75 points or 0.23%
Dow futures (YM=F): 30,189.00, flat
Nasdaq futures (NQ=F): 13,046.75, down 58.75 points or 0.45%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck