Stocks advanced on Thursday, with investors digesting the latest stronger-than-expected print on the labor market's recovery, while still eyeing spiking prices that could throttle the recovery.
The Dow jumped more than 400 points, or 1.3%, for the index's best day since March. The S&P 500 also gained more than 1%, and the Nasdaq added 0.7%. Bitcoin prices (BTC-USD) sank more than 9% to hover below $50,000, after Tesla CEO Elon Musk said the electric car-maker would stop accepting the cryptocurrency for vehicle purchases.
The rise in stocks on Thursday only partially reversed a sharp decline across the equity indexes earlier this week. Fears of rising inflation hammered Wall Street after grim consumer price data sparked a sell-off in blue chip and technology shares, amplifying new concerns about the rebound from COVID-19. The Dow Jones Industrial Index (^DJI), S&P 500 Index (^GSPC)and Nasdaq (^IXIC) all plummeted, closing more than 2% lower on the day. Tech stocks suffered their worst day since March 18, according to Yahoo Finance data, while the Dow had its worst showing since late January.
Meanwhile, after Friday's disappointing U.S. jobs report, all eyes Thursday were on initial jobless claims, which dipped below the psychologically-important threshold of 500,000 to a new pandemic-era low.
A weekend cyber-attack sharply drove up the cost of gas nationwide while sparking shortages, and those fears were partly alleviated after Colonial Pipeline — operator of the nation's largest fuel pipeline network — said late Wednesday that it began restarting service to the East Coast.
However, the episode reflected widening fears that price pressures across a range of goods and sectors may be rousing themselves from an extended slumber. Although the U.S. economy is poised to grow at breakneck speed this year — which has underpinned rallying stocks — mounting supply shortages in the face of surging demand are threatening to fan inflation.
Those fears crystallized early Wednesday, after the government reported that headline consumer prices surged by a faster than expected 4.2% last month. Excluding food and energy, prices jumped 0.9% in April and are up 3.0% over the year. And on Thursday, the government's print on producer prices also came in higher than expected, with core producer prices rising 4.1% last month versus the 3.8% increase expected.
“It’s not a matter of whether inflation is going to be firming over the next couple of months ... it will,” Garrett Melson, a portfolio strategist at Natixis Investment Manager Solutions, told Yahoo Finance on Wednesday.
“The bigger story is whether we’re seeing a persistent and structural shift higher in prices,” he added.
A system-wide disruption following a cyberattack on a key energy pipeline operator has sent gasoline prices higher, accelerating an already upward-moving trend in energy prices as demand for travel and fuel resurges coming out of the COVID-19 pandemic.
The tableau of faster growth and soaring prices complicates the Federal Reserve's policy of allowing the economy to run hot — and Wall Street's willingness to take the central bank at its word.
Investors have in turn also been pondering when the Fed might step in and adjust its highly accommodative monetary policies to stave off rising inflation. Many policymakers, however, have remained of the view that the central bank needs to keep rates low and sustain asset purchases at their current, aggressive rate to support the economy, which is still emerging from a worldwide health crisis.
4:03 p.m. ET: Stocks jump to end three-day losing streak; Dow gains 433 points, or 1.3% for best session since March
Here were the main moves in markets as of 4:03 p.m. ET:
S&P 500 (^GSPC): +49.45 (+1.22%) to 4,112.49
Dow (^DJI): +433.13 (+1.29%) to 34,020.79
Nasdaq (^IXIC): +93.31 (+0.72%) to 13,124.99
Crude (CL=F): -$2.34 (-3.54%) to $63.74 a barrel
Gold (GC=F): +$3.80 (+0.21%) to $1,826.60 per ounce
10-year Treasury (^TNX): -2.7 bps to yield 1.6680%
2:01 p.m. ET: Tech growth has 'played out in an accelerated fashion' over the past year: Venture capitalist
Tech companies' outperformance heading into 2021 has coincided with an expansion of applications of these firms' services against a pandemic-stricken backdrop. Even given tech and growth stocks' recent declines, the ubiquity of these programs remains intact, one venture capitalist noted to Yahoo Finance.
"The thing we've all realized in the last year is the mantra that ... software's eating the world, that's played out," Flybridge Capital co-founder Jeff Bussgang told Yahoo Finance. “The market sizes have exhibited more strength, more growth than ever before. So all the little bets that investors like Flybridge and other venture capital firms have made over the years in technology transformation and innovation, that’s all now played out in an accelerated fashion.”
“One of the big trends we’re seeing is the age of platforms is beginning to mature, where companies like Google and Amazon and Facebook have built these extraordinary platforms, cloud platforms, AI platforms, and now we’re seeing the age of vertical applications," he added. "We refer to it as applied AI, where people are taking these incredible AI tools and applying them to individual vertical industries.”
1:03 p.m. ET: Stocks hold onto gains, led by Dow
The three major indexes held higher intraday on Thursday, with the Dow outperforming relative to the S&P 500 and Nasdaq.
The Dow rose by 400 points, or 1.2%, shortly after 1 p.m. in New York. A 3% rise in shares of Home Depot led advances, followed closely by more than 2% gains in JPMorgan Chase and Apple. Only Chevron shares traded lower in the index.
The utilities, financials and industrials sectors led to the upside in the S&P 500. The index overall gained more than 1%, with only the energy sector in the red. The Nasdaq gained 0.4%, paring some earlier advances but still holding higher on the day.
9:30 a.m. ET: Stocks open higher
Here's where markets were trading shortly after the opening bell on Thursday:
S&P 500 (^GSPC): +20.70 points (+0.51%) to 4,083.74
Dow (^DJI): +64.47 points (+0.19%) to 33,652.13
Nasdaq (^IXIC): +132.23 points (+1.01%) to 13,179.70
Crude (CL=F): -$1.94 (-2.94%) to $64.14 a barrel
Gold (GC=F): -$6.80 (-0.37%) to $1,816.00 per ounce
10-year Treasury (^TNX): -2.3 bps to yield 1.68%
8:45 a.m. ET: Producer prices jumped by a record year-over-year margin in April
Producer prices jumped more than expected in April, with demand for services during the recovery out of the pandemic pushing prices sharply higher.
The Bureau of Labor Statistics' (BLS) April producer price index (PPI) showed a rise of 0.6% month-over-month, topping estimates for a 0.3% rise, according to Bloomberg consensus data. Excluding food and energy prices, the PPI was up an even more marked 0.7%, matching the prior month's gain.
Over last year, producer prices surged 6.2%, marking the greatest advance since the BLS first began calculating the 12-month data in 2010. Consensus economists were looking for a rise of 5.8%.
Much of the rise came from a jump in prices for final demand services, which rose 0.6% month-on-month for a fourth straight monthly increase. Within this category, transportation and warehousing prices moved higher by 2.1% in April over March. For final demand goods, food costs rose markedly, with these also increasing by 2.1% month-on-month.
8:40 a.m. ET: Initial jobless claims reach new pandemic-era low
Initial unemployment claims dropped more than expected to a fresh pandemic-era low, with new filings inching back toward pre-pandemic levels as more vaccinated Americans return to work and in-person activities.
New weekly jobless claims totaled 473,000 during the week ended May 8, beating estimates for 490,000 and falling from the upwardly revised 507,000 during the prior week. Previously, 498,000 new claims were reported for the previous week.
Continuing claims also dipped slightly to 3.655 million for the week ended May 1, down from the 3.700 million reported for the prior week.
7:21 a.m. ET Thursday: Stocks head toward a fourth straight day of losses
Here's where markets were trading ahead of the opening bell:
S&P 500 futures (ES=F): 4,046.00, down 12.75 points or 0.31%
Dow futures (YM=F): 33,346.00, down 162 points or 0.48%
Nasdaq futures (NQ=F): 12,968.75, down 29.75 points or 0.23%
Crude (CL=F): -$1.75 (-2.65%) to $64.33 a barrel
Gold (GC=F): -$8.20 (-0.45%) to $1,814.60 per ounce
10-year Treasury (^TNX): -0.5 bps to yield 1.698%
6:00 p.m. ET Wednesday: Stock futures open mixed
Here's where markets were trading as the overnight session kicked off:
S&P 500 futures (ES=F): 4056.25, down 2.5 points
Dow futures (YM=F): 33526, up 18 points
Nasdaq futures (NQ=F): 12981.25, down 17.25 points
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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