Positive labour market data sparks a strong recovery in US stocks, led by gains in tech and pharma
On Thursday, stocks rebounded strongly after positive labour market data boosted investor confidence in the US economy, following a sharp sell-off earlier in the week.
According to CNBC, the S&P 500 rose by 2.3 percent, closing at 5,319.31, marking its best performance since November 2022. The Dow Jones Industrial Average climbed 683.04 points, or 1.76 percent, to reach 39,446.49, and the Nasdaq Composite gained 2.87 percent, ending the day at 16,660.02.
Eli Lilly, a major pharmaceutical company, surged 9.5 percent after reporting better-than-expected earnings and increasing its full-year outlook due to strong demand for its diabetes treatment, Mounjaro, and obesity drug, Zepbound.
Other stocks that had dropped earlier in the week, including chipmakers Nvidia and Broadcom, saw significant gains, each rising more than 6 percent. Meta Platforms increased by 4.2 percent, and Apple saw a 1.7 percent uptick.
The US Department of Labour reported that first-time jobless claims dropped to 233,000 last week, a decrease of 17,000 from the previous week and below the Dow Jones estimate of 240,000. This data helped alleviate some concerns about the strength of the labour market.
Following the release of the jobless claims data, the 10-year Treasury yield reached 4 percent, a level last seen before the disappointing July jobs report sent markets tumbling.
The market was also aided by a weaker Japanese yen against the US dollar. The yen’s decline, which led to the unwinding of a popular carry trade among hedge funds, was one of the key factors contributing to Monday’s stock market drop.
Liz Young, head of investment strategy at SoFi, commented on CNBC’s “Closing Bell” that the market rally on Thursday indicated that investors are becoming more responsive to incoming data, suggesting increased volatility as new, potentially conflicting, information arises.
Despite Thursday's rally, the major indices remain down for the week. The S&P 500 has dropped 0.5 percent so far, while both the Dow and Nasdaq have declined by approximately 0.7 percent each.
