Nasdaq, S&P, Dow make small gains amid labor market data, some disappointing earnings
U.S. stocks on Thursday overcame a mixed open to tick slightly higher, though moves remained small. A batch of disappointing corporate earnings offset favorable labor market data.
Monetary policy continued to remain in the spotlight, as more European central banks issued decisions on interest rates. Market participants are pondering the seemingly differing views between global players and the Federal Reserve.
The tech-heavy Nasdaq Composite (COMP:IND) gained 0.31% to 16,353.71 points in morning trade. Airbnb (ABNB) was a significant drag on the index, and so were chip stocks which took a hit from a decline in Arm (ARM).
The benchmark S&P 500 (SP500) added 0.38% to 5,207.49 points, while the blue-chip Dow (DJI) was on track for a seven-day win streak, climbing 0.50% to 39,251.50 points.
All 11 S&P sectors were in the green, with the exception of Technology.
Expectations were very high for Airbnb (ABNB) and Arm (ARM) going into their quarterly reports. The vacation rental firm and the British chip designer issued guidance that fell just short of estimates.
Kids gaming platform Roblox (RBLX) also failed to live up to Street expectations with its current quarter bookings forecast.
Labor market data before the opening bell countered some of the hit to sentiment from earnings. The number of Americans filing for initial jobless claims in the last week rose to 231K, its highest level in more than eight months.
Following on from last Friday’s cooler-than-expected nonfarm payrolls report, the unemployment claims numbers suggested that the highly resilient jobs market was showing signs of cooling, which in turn would spur the Fed to cut interest rates sooner.
“A notable jump in U.S. initial jobless claims … highest since August. While this weekly data series is noisy, the jump is consistent with other indicators of a slowing economy that puts the lower income groups at most risk,” Mohamed El-Erian, chief economic advisor at Allianz, said on X (formerly Twitter).
Bond-buying picked up some pace after the jobless claims data, though Treasury yields largely remained mixed. Eyes are on an upcoming $25B 30-year bond auction in the afternoon. The longer-end 30-year yield (US30Y) was up about 1 basis point to 4.65%, while the 10-year yield (US10Y) was little changed at 4.49%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 1 basis point to 4.83%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
With the labor market update bringing rate cuts back into the conversation, traders also paid attention to moves by the Bank of England (BoE) and Poland’s central bank earlier in the day. The former maintained interest rates at a 16-year high, but appeared to be positive in terms of anticipated rate cuts ahead. Governor Andrew Bailey also hinted that the BoE may cut rates quicker than markets expect. Meanwhile, the Narodowy Bank Polski kept rates unchanged as well.
“While the Bank of England did not explicitly signal near-term easing in its accompanying statement, there were several dovish elements that suggest rate cuts are approaching. For now, we maintain our call for an initial 25 bps BoE rate cut in August, while acknowledging that the risk of an earlier June move has increased,” Wells Fargo’s Nick Bennenbroek said.
The attention is now on the European Central Bank, which is widely expected to lower rates in June. Investors at home are mulling over the apparent difference in monetary policy strategy between the European banks and the Fed’s more cautious “wait-and-watch” stance.