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U.S. stocks climbed on Thursday as traders parsed another batch of inflation data which suggested the Federal Reserve may be near the end of its interest rate hikes and as the first reports from what’s expected to be a gloomy first quarter earnings season arrived, with several marquee releases due on Friday.
What’s happening
-
Dow Jones Industrial Average
DJIA,
+0.40%
rose 107 points, or 0.3%, at 33,755. -
S&P 500
SPX,
+0.62%
gained 24 points, or 0.6%, to 4,116. -
Nasdaq Composite
COMP,
+1.33%
increased 148 points, or 1.2%, to 12,077.
U.S. stocks fizzled out Wednesday after early gains: the Dow Jones Industrial Average fell 38 points, or 0.11%, to 33,647, while the Nasdaq dropped more than 100 points, or almost 0.9%.
What’s driving markets
U.S. inflation data released this week showed that price pressures are slowly ebbing, even if so-called “core” inflation has proved more obstinate. However, minutes from the Federal Reserve’s March meeting have contributed to creeping recession fears.
On Thursday, data showed U.S. wholesale prices sank 0.5% in March, the biggest decline in almost three years. On a year-to-year basis, the headline PPI index fell to 3.6% in March from 4.5% in February. The PPI index is seen as a leading indicator for consumer prices.
One day earlier, the CPI index, a closely-watched inflation gauge, showed prices rose a scant 0.1% in March, while the year-over-year headline inflation rate declined to 5.0%. The core inflation rate, which strips out volatile food and energy costs, moved up to 5.6% over the past 12 months, from 5.5% in February.
Weekly data on the number of Americans applying for unemployment benefits showed an increase last week of 11,000 to 239,000, indicating a small but steady increase in layoffs in a generally strong U.S. labor market.
Investors are now turning their attention to corporate earnings as the informal start to the first-quarter reporting season arrived Thursday.
“Now that we’ve got through the economic data side of things, the focus is on earnings,” said Jake Jolly, head of investment analysis at BNY Mellon.
U.S. stocks have been trading in a notably tight range over the past two weeks, with the S&P 500 trading closely around the 4,100 level, according to FactSet data. The rolling 7-day average for absolute percentage moves for the S&P 500 fell below 0.3% to the lowest level since Nov. 2021 on Wednesday, according to Dow Jones Market Data.
Looking ahead, investors will receive critical input from some of the biggest U.S. banks about how the collapse of Silicon Valley Bank and two other U.S. lenders might impact their business, and the availability of credit in the economy.
“Anything that offers a forward look at credit conditions will be key,” Jolly added.
Investors digested reports from Delta Air Lines
DAL,
and Fastenal
FAST,
Thursday. Now a wave of earnings from some of the largest banks in the U.S., including JPMorgan Chase
JPM,
Citigroup
C,
and Wells Fargo
WFC,
are due on Friday.
FactSet estimates have earnings per share for S&P 500 companies declining 6.8% during the first quarter. If this comes to pass it would mark a second straight quarter of contraction.
In other news, the euro
EURUSD,
rose to its strongest level against the U.S. dollar in a year on Thursday. The shared currency was up 0.6% at $1.11 in recent trade.
Companies in focus
-
Delta Air Lines Inc. stock
DAL,
-1.32%
surged Thursday, after the air carrier swung to a first-quarter profit as revenue rose above expectations, and said it was “confident” in its full-year projections given a “strong” outlook for the current quarter. -
U.S.-traded shares of Alibaba Group Holding Ltd.
BABA,
+2.33%
sank Wednesday following a report that SoftBank Group Corp. has moved to sell most of its stake in the Chinese tech giant. -
Match Group Inc.
MTCH,
+4.30%
was one of the best performers in the S&P 500 after a Barclays analyst upgraded the stock to overweight.
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