U.S. stocks managed to secure modest gains on Thursday after a turbulent trading session. The S&P 500 narrowly escaped a third consecutive day of losses as Wall Street investors wait in anticipation of Friday’s jobs report. The S&P 500 index (SPX) increased by 14.61 points, or 0.1%, closing at 4,104.99, according to preliminary data from FactSet. Meanwhile, the tech-heavy Nasdaq Composite (COMP) experienced a rise of 91.09 points, or 0.8%, finishing the day at 12,087.96. Lastly, the Dow Jones Industrial Average (DJIA) closed with a slight uptick of 2.63 points, or less than 0.1%, at 33,485.35.
Cash trading in stocks will be unavailable on Friday when the Department of Labor releases the March jobs report. Economists polled by the Wall Street Journal predict a median forecast of 384,000 additional non-farm payroll job gains for this past month, though the predictions range from 200,000 to 500,000. This is a key indicator for market analysts, as greater job growth can often lead to more inflation and, consequently, higher interest rates that could impact the stock market.
This latest trading session was somewhat mixed, reflecting a sense of uncertainty among investors. Market participants continue to weigh the potential risks of rising interest rates and inflation, driven in part by massive fiscal stimulus and economic reopening plans. On the other hand, the accelerated vaccine rollout and impressive quarterly earnings results from major corporations provide some cause for optimism in the markets.
Tech stocks helped lead the way for the broader market’s gains, with Apple (AAPL) and Tesla (TSLA) among the notable winners. Apple shares increased by 1.4% and Tesla shares by 2% on Thursday, partially offsetting the previous day’s losses. Financial stocks were mostly in the green as well, with Citigroup (C) rising by 1.3%.
However, some experts suggest that the recent rebounds may not be sustainable. Scott Minerd, Global Chief Investment Officer at Guggenheim Partners, warned investors in a tweet that U.S. equities are in a “possible ‘melt-up'” due to excess liquidity. He further cautioned that the market could experience a “correction” in bond prices later this year.
Mixed economic data also contributed to Thursday’s choppy session. The Institute for Supply Management (ISM) reported that the U.S. manufacturing sector grew at a slower pace in March than anticipated, with the Purchasing Managers Index (PMI) clocking in at 57.5, compared to forecasts of 59.5. However, new orders and employment figures were strong, indicating that overall demand remains robust. In addition, weekly jobless claims came in lower than expected, and the trade deficit hit a record high of $106 billion.
In contrast, the energy sector struggled, with oil prices slipping on Thursday amid concerns over the ongoing pandemic and global economic recovery. West Texas Intermediate crude (WTI) fell to $44.40 per barrel, down 2.9%, while Brent crude dipped to $47.14, a decline of 2.8%. Investors are closely monitoring the developments in this area as oil prices have a significant impact on market dynamics.
Looking ahead, investors are keeping a close eye on the upcoming corporate earnings season, which will kick off in mid-April. Major banks such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Goldman Sachs (GS) are set to report their quarterly earnings in the coming weeks, which could provide more clarity on the health of the U.S. economy and financial sector.
The market also continues to track developments related to President Biden’s proposed infrastructure plan worth $2.25 trillion. The ambitious proposal would be funded by tax increases on corporations and wealthy individuals over a 15-year period, though its passage through Congress may face hurdles amid concerns from both Republicans and some moderate Democrats.
Overall, Wall Street investors are facing an increasingly complex landscape, with multiple factors at play that could significantly impact market trends. Economic recovery and vaccine rollouts certainly offer hope and some positive momentum for the markets. However, potential risks such as inflation, interest rates, and political uncertainty must be considered as well. Undoubtedly, the next few weeks of earnings results and economic data will be closely watched by market participants eager to make sense of this ever-evolving environment.
