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U.S. stocks on Thursday extended their gains to a second straight session, as fears of financial contagion continued to recede and market participants made bets that the Federal Reserve was close to being done with rate hikes.
Big technology names – which had been shunned for most of last year – resumed their climb, with investors snapping them up along with other growth stocks.
The tech-heavy Nasdaq Composite (COMP.IND) was up 0.71% to 12,010.78 points in morning trade. Moreover, the Nasdaq 100 index pushed deeper into bull market territory, having climbed more than 20% from its lowest closing level in December last year.
The benchmark S&P 500 (SP500) added 0.47% to 4,046.94 points, while the blue-chip Dow (DJI) climbed 0.18% to 32,776.96 points.
Of the 11 S&P sectors, eight were trading in the green, led by Real Estate and Consumer Discretionary. Technology gained about 1%.
The heavyweight Technology sector also got a boost from JD.com (JD). The U.S.-listed shares of the Chinese e-commerce giant jumped after it announced plans to separately list two of its units on the Hong Kong Stock Exchange.
Sentiment on Thursday was additionally helped by economic data which showed that the number of Americans filing for weekly jobless claims increased to 198K, higher than the expected figure of 196K. Meanwhile, the final estimate for U.S. Q4 GDP growth was revised downward to +2.6%. The numbers pointed to cooling in both the economy and the highly resilient labor market, suggesting that the Fed’s aggressive rate hiking cycle was having its intended effect.
The Fed’s course in terms of interest rates remained in the spotlight. Expectations on the central bank’s move at its May meeting continue to fluctuate. According to the CME FedWatch tool, markets are now pricing in a ~49% chance of no hike at the May meeting. That number was nearly 60% on Wednesday. Perhaps more importantly, markets now believe that the Fed will top out the peak interest rate at 5.00% to 5.25%.
Later in the day, Richmond Fed President Tom Barkin will speak at an event.
Turning to the fixed income markets, Treasury yields were mixed on Thursday, with the longer-end 10-year yield (US10Y) flat at 3.57% and the 2-year yield (US2Y) up 5 basis points to 4.13%.
Among active stocks, Charles Schwab (SCHW) was the top percentage loser on the S&P 500 (SP500) after it was downgraded by Morgan Stanley on a clouded outlook.
Block (SQ) gained after giving out details on user numbers and identity verification. The company had been the subject of a short report issued by Hindenburg Research last week.
