New York – US stocks are pushing higher Thursday after better-than-expected reports on the economy helped stabilize Wall Street after its worst drop in more than four months.
The S&P 500 was 0.7% higher following encouraging data on the pace of layoffs and the strength with which the economy rebounded during the summer after its coronavirus-induced coma. Economists warn big challenges remain, however, and the S&P 500 emerges from a 3.5% drop on Wednesday amid fears that the worsening pandemic will push the economy and corporate profits down again. .
The Dow Jones Industrial Average rose 69 points, or 0.3%, to 26,589 at 11:05 a.m. EST, and the Nasdaq composite was 1.1% higher. Within the S&P 500, a strong rebound in technology stocks more than offset losses in healthcare companies.
Across the Atlantic, European stocks rose after the head of the European Central Bank said there was “no doubt” he would provide more stimulus in December. They were also recovering from a steep drop on Wednesday, when France and Germany announced new restrictions on businesses in hopes of slowing the accelerated spread of the virus.
Despite the relatively calm movements, caution continues to weigh on the market. A measure of investor fear in the US stock market reached its highest level since June before retreating on Thursday, and oil prices continued their sharp decline amid concerns over demand from an economy weakened by viruses .
Beyond Europe, coronavirus cases are also on the rise in the United States, raising concerns over restrictions on business returns. Even if the large-scale lockdowns that choked the economy at the start of this year do not return, the fear is that the worsening pandemic could nonetheless drive customers away from companies and reduce their profits.
The economy had made progress during the summer, and it grew at a record annual rate of 33.1% from July to September, according to a government estimate released Thursday. This followed its crash from April to June, when it declined to an annualized rate of 31.4%.
More recently, the number of American workers claiming unemployment benefits fell last week to 751,000. While this is still incredibly high compared to before COVID-19, it is not as bad as the 791,000 this week. former. It was also better than economists had expected.
But the nascent recovery is now under threat with the surge in coronavirus cases and Congress and the White House unable to provide further support to the economy. Economists and investors have been asking for such help since the summer, when the last round of additional benefits for laid-off workers and other stimulus packages approved by Congress earlier this year expired.
Hope is fading that Washington can do something soon, and House Speaker Nancy Pelosi sent a letter to Treasury Secretary Steven Mnuchin on Thursday listing all the topics she is waiting to hear from in their negotiations. . They include benefits for laid-off workers and measures on coronavirus testing.
Several of America’s biggest companies are expected to report on the profit they made over the summer after trading closed on Thursday. Due to their massive market value, movements in shares of Apple, Amazon, Facebook, and Google’s parent company have a much larger impact on the S&P 500 and other indices than other stocks. All were up 0.6% to 4.8% from their income reports.
Expectations are high for big tech companies, which have weathered the pandemic well. Investors have been pushing their stock prices higher believing their earnings will continue to soar as work from home and other trends accelerated by the pandemic continue.
But another tech giant, Microsoft, saw the potential downsides of such huge expectations on Wednesday. That’s when its stock fell 5%, although it reported higher earnings and income for the last quarter than Wall Street had expected.
All over Wall Street, analysts noted that stocks weren’t as boosted as they usually do after reporting higher-than-expected earnings.
It dampened enthusiasm after what was a better reporting season Wall Street had feared. Earnings per share of S&P 500 companies are on track to decline by about 13% from the previous year. That’s a much smoother drop than the nearly 21% drop Wall Street expected in early October, according to FactSet.
In European stock markets, the French CAC 40 rose 0.4% after erasing an earlier loss, and the German DAX rose 0.7%. The FTSE 100 in London added 0.3%.
In Asia, Japan’s Nikkei 225 fell 0.4% after its central bank remained stable on monetary policy while lowering its outlook amid COVID-19 outbreaks.
“Our country’s economy is still in dire straits due to the effects of the coronavirus inside and outside of Japan. But since business activity has picked up, we can say that the economy has recovered, ”BOJ Governor Haruhiko Kuroda told reporters.
The South Korean Kospi fell 0.8%, the Hong Kong Hang Seng fell 0.5%, and Shanghai shares edged up 0.1%.
The 10-year Treasury yield held steady at 0.79%.
Benchmark US crude oil fell 3.4% to $ 36.11 per barrel. Brent, the international standard, lost 3.3% to $ 38.32 per barrel.
AP Business editor Elaine Kurtenbach contributed.