U.S. stocks rose on Thursday, building on a three-day winning streak, as investors assessed a new batch of corporate earnings and economic data.
The Dow Jones Industrial Average gained 250 points. The S&P 500 climbed 0.5%, supported by energy and financials. The Nasdaq Composite rose 0.5%.
A better-than-expected jobless claims report helped boost sentiment. First-time claims for unemployment insurance totaled 779,000 for the week ended Jan. 30, below the 830,000 estimate from economists surveyed by Dow Jones.
Thursday’s labor market data showed “further momentum” in the economic recovery, “driving another blast of ‘risk-on’ into equities,” Charlie McElligott, equity derivatives strategist at Nomura, said in a note.
EBay jumped more than 10% after beating on both the top and bottom lines and issuing a rosier-than-expected forecast for the first quarter. PayPal gained more than 6% after strong quarterly results, while Qualcomm slipped over 7% after reporting revenues below consensus estimates for its fiscal first quarter.
Apple rose 1.5% after CNBC reported that it is close to finalizing a deal with Hyundai-Kia to produce driverless cars. News that the two may be close to a deal comes after Hyundai said in January that it was in preliminary talks with the iPhone maker to develop a car.
The moves on Wall Street followed three straight positive sessions for the major averages as the speculative retail trading mania faded. So far this week, the blue-chip Dow has gained more than 3%, while the S&P 500 and the Nasdaq have risen 3.6% and 4.5%, respectively. GameStop, the poster child of the buying frenzy, has fallen more than 80% this week alone.
The Cboe Volatility Index, known as the VIX, dropped sharply as the market recovered from last week’s losses. The fear gauge fell from its 30-plus level at Friday’s close to around 22.9 Wednesday, posting its largest three-day decline ever, according to FundStrat.
Many on Wall Street are optimistic that the vaccine rollout, coupled with easy monetary policy and potentially more fiscal support, will sprout stronger growth in earnings and drive the market to new highs.
“We believe that we are still in the early stages of a new bull market, transitioning from the ‘hope’ phase to a longer ‘growth’ phase as strong profit growth emerges,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs, said in a note.
On the stimulus front, Democrats are moving forward with President Joe Biden’s $1.9 trillion Covid-19 relief proposal. Republicans have countered with a more modest $618 billion package, which includes new stimulus checks of $1,000 per person.