March 3, 2024

Deniz meditera

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Stocks drift after hitting record highs as traders eye Biden’s plans, earnings

8 min read

Stocks hit record levels as investors considered a batch of stronger-than-expected earnings results from major companies and a sweeping set of proposals from President Joe Biden aimed at revamping the country’s infrastructure and supporting families, children and students. 

[Click here to read what’s moving markets heading into Friday, April 30]

The S&P 500 rose to a record high of more than 4,200 just after market open. The Dow recovered intraday losses to trade higher by more than 200 points, even as shares of Merck (MRK) declined sharply after missing earnings expectations. The Nasdaq also advanced.

Traders considered Biden’s address to a joint session of Congress late Wednesday, during which he declared that “America is back on the move again” after a pandemic that devastated the U.S. economy and killed hundreds of thousands of individuals across the country. The address also served as a forum for him to tout his $2 trillion infrastructure plan and officially unveil a $1.8 trillion proposal aimed at supporting children, students and families, and which will be funded in part through tax increases on wealthy Americans. 

Earnings season has also continued to chug along. Shares of Apple (AAPL) gained after the company posted fiscal second-quarter results that easily exceeded expectations, with sales coming in better-than-expected across the Mac, iPad and especially the iPhone in the months following the launch of the 5G-enabled iPhone 12. Facebook (FB) shares also advanced after quarterly results showed a jump in both users and sales, with customers’ advertising spending accelerating as the pandemic abates. 

The strong results from the mega-cap tech names adds to a parade of companies that have so far exceeded expectations this earnings season, with a pick-up in economic activity and consumer confidence driving a surge in corporate profits over the doldrums of last year. As of early Wednesday, companies comprising nearly half of the S&P 500’s market capitalization had reported earnings results, with 83% of these corporations topping estimates, and by an average of 21.7%. Companies including Amazon (AMZN) are poised to report results on Thursday.

Traders also considered the Federal Reserve’s latest monetary policy statement, which included no changes to policies but did highlight the recent improvements in U.S. economic conditions. In his press conference Wednesday afternoon, Fed Chair Jerome Powell doubled down on his messaging that the Federal Reserve was looking for substantial further progress toward its goals of maximum employment and price stability in the coming months, with these criteria needing to be met by actual economic results rather than mere projections for further improvement. 

“With no meaningful change to monetary policy or communication, this meeting was simply a message to market participants to sit back and observe as the economic recovery continues to unfold,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email Wednesday. “The Fed did acknowledge the pick-up in the pace of the economic recovery but came short of signaling any changes to policy at this stage in the cycle. It is difficult to argue the Fed’s position on inflation given the amount of slack that still exists in the labor market. However, if the recovery continues to gain strength, we expect the Fed will need to move away from peak policy accommodation.”

4:02 p.m. ET: Stocks end a volatile session higher, S&P 500 reaches record high after more earnings top expectations

Here were the main moves in markets as of 4:02 p.m. ET:

  • S&P 500 (^GSPC): +28.43 (+0.68%) to 4,211.61

  • Dow (^DJI): +242.22 (+0.72%) to 34,062.60

  • Nasdaq (^IXIC): +31.52 (+0.22%) to 14,082.55

  • Crude (CL=F): +$1.10 (+1.72%) to $64.96 a barrel

  • Gold (GC=F): -$0.10 (-0.01%) to $1,773.80 per ounce

  • 10-year Treasury (^TNX): +2 bps to yield 1.6400%

12:25 p.m. ET: Uber, Lyft shares sink after Labor Secretary reportedly supports reclassifying gig workers as employees

Shares of Uber (UBER) and Lyft (LYFT) dropped intraday on Thursday after Reuters reported that President Joe Biden’s Labor Secretary Marty Walsh supported reclassifying gig workers as “employees,” a title which would confer additional benefits to the workers but that would increase costs for gig economy companies like the ride-hailing giants. Uber shares sank more than 7% around 12:30 in New York, while Lyft shares were down more than 10%. 

“We are looking at it but in a lot of cases gig workers should be classified as employees … in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board,” Walsh told Reuters, according to a report from the news outlet. 

Approximately 55 million people in the U.S. were classified as gig workers in the U.S as of 2017, according to Bureau of Labor Statistics data. This proportion has been estimated to have climbed further in the years since. 

11:06 a.m. ET: Stocks cut gains, Dow briefly turns slightly negative

The three major indexes traded near the flat line Thursday intraday, erasing gains after the S&P 500 and Nasdaq each hit record levels earlier in the session. 

The Dow turned slightly negative as a 5% drop in shares of Merck outweighed gains elsewhere in the index. Both Merck’s first-quarter sales and profit missed expectations for the first quarter, bucking the trend of broad-based earnings beats across most major companies for first-quarter results.

The health-care sector underperformed in the S&P 500 alongside the information technology and materials sectors. Communication services outperformed following strong earnings results from Facebook. 

10:00 a.m. ET: Pending home sales rose for the first time in three months in March 

Pending home sales rose in March over February, posting a monthly advance for the first time since December as rising mortgage rates, tight inventory and inclement weather in February cooled some of the housing market’s recent surge.

Pending home sales increased by 1.9% in March following a downwardly revised drop of 11.9% in February, the National Association of Realtors said Thursday. The came in short of the 4.4% gain expected, however, according to Bloomberg consensus data. 

“The increase in pending sales transactions for the month of March is indicative of high housing demand,” Lawrence Yun, NAR’s chief economist, said in a press statement. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.”

9:30 a.m. ET: Stocks open at record levels 

Here’s where markets were trading after the opening bell: 

  • S&P 500 (^GSPC): +33.19 points (+0.8%) to 4,216.37

  • Dow (^DJI): +169.75 points (+0.5%) to 33,990.13

  • Nasdaq (^IXIC): +151.99 (+1.1%) to 14,209.21

  • Crude (CL=F): +$1.40 (+2.19%) to $65.26 a barrel

  • Gold (GC=F): -$6.60 (-0.37%) to $1,767.30 per ounce

  • 10-year Treasury (^TNX): +5.5 bps to yield 1.675%

8:45 a.m. ET: U.S. economy expanded at a 6.4% annualized rate in the first quarter, with personal consumptions jumping more than expected 

U.S. gross domestic product increased at a 6.4% quarter-over-quarter, seasonally adjusted annualized rate in the first three months of 2021, the Bureau of Economic Analysis said Thursday in its first estimate on GDP. This marked an acceleration from the 4.3% annualized growth rate from the fourth quarter of 2020, but was slightly below estimates for 6.7%, according to Bloomberg consensus data. 

Personal consumption, the biggest contributor to U.S. economic activity, jumped 10.7%, aided by two rounds of stimulus checks sent to most Americans and easing social distancing restrictions that allowed consumers to go out more often to spend. The increase accelerated markedly from the fourth quarter’s 2.3% rise in personal consumption, and represented the second-fastest growth rate in about 50 years. 

Weighing on GDP, however, was a drop in private inventories, with demand beginning to strongly outstrip supply during the recovery. This also spurred a jump in imports, with the widening trade deficit also weighing on GDP in the first quarter. 

8:41 a.m. ET: New jobless claims fall to a fresh pandemic-era low, dipping from prior week’s upwardly revised level

New weekly jobless claims dipped in the Labor Department’s latest report, reaching a pandemic-era low of 553,000 for the week ended April 24. This came in slightly higher than the 540,000 anticipated, but was below the 566,000 reported for the prior week.

New jobless claims held below 600,000 for a third straight week, dipping to the lowest level since mid-March 2020 before the COVID-19 pandemic dealt a major blow to the U.S. economy. During the comparable week last year, new weekly jobless claims totaled nearly 3.5 million.

Continuing claims unexpectedly ticked up slightly during the week ended April 17, totaling 3.660 million after a downwardly revised 3.651 million during the prior week. 

8:15 a.m. ET: New York City Mayor Bill de Blasio says city will reopen fully starting July 1: MSNBC

New York City Mayor Bill de Blasio said on MSNBC’s “Morning Joe” Thursday morning that NYC would open with full capacity beginning July 1. 

“Our plan is to fully reopen on July 1. We are ready for stores to open, for businesses to open, offices, theaters, full strength,” de Blasio said. 

The announcement comes after an acceleration in New York City’s vaccine roll-out. More than 6.3 million doses have so far been administered in the city, and more than one-third of the adult population of the city has been fully vaccinated. 

7:20 a.m. ET Thursday: Stock futures point to a higher open after Biden’s congressional address, strong earnings 

Here’s where markets were trading ahead of the opening bell on Thursday: 

  • S&P 500 futures (ES=F): 4,206.25, up 30 points or 0.72%

  • Dow futures (YM=F): 33,873.00, up 149 points or 0.44%

  • Nasdaq futures (NQ=F): 14,038.00, up 145.75 points or 1.05%

  • Crude (CL=F): +$0.89 (+1.39%) to $64.75 a barrel

  • Gold (GC=F): +$1.50 (+0.08%) to $1,775.40 per ounce

  • 10-year Treasury (^TNX): +2.7 bps to yield 1.647%

6:05 p.m. ET Wednesday: Stock futures drift higher after Apple, Facebook earnings top estimates 

Here’s where markets were trading Wednesday evening: 

  • S&P 500 futures (ES=F): 4,184.50, up 8.25 points or 0.2%

  • Dow futures (YM=F): 33,725.00, up 1 points or roughly unchanged

  • Nasdaq futures (NQ=F): 13,960.25, up 68 points or 0.49%

NEW YORK, NEW YORK - APRIL 15: People walk by the New York Stock Exchange on April 15, 2021 in New York City. After major companies reported strong earnings and new economic data points to a rebound in consumer spending, U.S. stocks climbed to record levels on Thursday. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – APRIL 15: People walk by the New York Stock Exchange on April 15, 2021 in New York City. After major companies reported strong earnings and new economic data points to a rebound in consumer spending, U.S. stocks climbed to record levels on Thursday. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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