U.S. stocks rose slightly despite an unexpected jump in jobless claims that kept investors on edge about the economy.
The Dow Jones Industrial Average rose 72 points higher, the S&P 500 is 0.2% higher and the tech-heavy Nasdaq Composite is leading the markets with a 0.3% gain.
Jobless claims unexpectedly rose to 419,000 last week, higher than the 350,000 economists polled by Dow Jones estimated and more than the upwardly revised 368,000 from the previous period, the Labor Department reported Thursday.
The 10-year Treasury yield ticked lower after the report was published, to 1.262%. The rate dropped to a 5-month low of 1.17% earlier in the week that spooked stocks.
As a result of both worries about the economy resurfacing and yields falling lower, investors are jumping back into their favorite tech stocks as optimism about the sector grows ahead of earnings next week.
Microsoft is trading 1% higher after Citi raised its target on it, saying it has the potential to beat Wall Street expectations when it reports quarterly earnings next week and predicting its stock will rise more than 30% over the next year.
Apple stock also rose 1% after Cannacord raised its price target on the stock and reiterated its buy rating on it as the market shows “strong demand” for Apple products ahead of its earnings next week.
The Dow is up 0.5% on the week and sits less than 1% from a record high, bouncing back from a 700-point-plus rout on Monday.
Meanwhile, names closely linked to the economic reopening are lower with cruise lines like Royal Caribbean and Norwegian Cruise Line down more than 1.5%. The Energy Select SPDR is slightly lower too.
Still, a strong second-quarter earnings reporting season continues, with American Airlines posting a profit for the second-quarter, snapping a streak of five straight quarters with losses, thanks to the recovery in travel demand and government aid. The shares, which were up 8% this week, are down 1% on Thursday. Similarly, Southwest Airlines reported a quarterly profit, but the carrier’s stock is 3% lower.
Union Pacific, traded up more than 1% after reporting second-quarter net income of $1.8 billion or $2.72 per diluted share. That’s up from $1.1 billion, or $1.67 per diluted share in the year-ago quarter.
Texas Instruments is down more than 4.5% after the chipmaker topped expectations for the second quarter, but warned that third quarter results could fall short of analysts’ estimates.
The Dow is up 0.26% on the week and sits less than 1% from a record high, bouncing back from a 700-point-plus rout on Monday.
“The truth is investors have been very spoiled by the recent stock market performance,” noted LPL Financial chief market strategist Ryan Detrick. “Incredibly, we haven’t seen as much as a 5% pullback since October. Although we firmly think this bull market is alive and well, let’s not fool ourselves into thinking trees grow forever. Risk is no doubt increasing as we head into the troublesome August and September months.”
So far 15% of the S&P 500 has reported earnings, with 88% beating earnings estimates, according to Refinitiv. Of the companies that have reported, 84% have topped revenue expectations.
“We expect a continuation of sloppy trading through the seasonally-weak summer months; however, our base case remains that the primary trend over the next 12 months remains higher,” Keith Lerner, chief market strategist at Truist wrote in a note to clients. “The S&P 500, which just made a new record high last week, has gone one of the longest periods of the past decade without so much as a 5% pullback,” he added.
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