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S&P 500 rebounds as investors take rate hike cues from jobless claims rise

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2022-12-08T19:19:50Z

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. REUTERS/Brendan McDermid

The S&P 500 index (.SPX) rose on Thursday, looking on course to snap a five-session losing streak, as technology shares led a broad-based recovery with investors seeing a rise in weekly jobless claims as a sign the pace of interest rate hikes could soon slow.

Wall Street’s main indexes have come under pressure in recent days, with the benchmark index shedding 3.6% so far in December on expectations of a longer rate-hike cycle and downbeat economic views from some top company executives.

However, investors drew some comfort on Thursday after data showed the number of Americans filing claims for jobless benefits increased moderately last week, while unemployment rolls hit a 10-month high toward the end of November.

The report follows data last Friday that showed U.S. employers hired more workers than expected in November and increased wages, spurring fears that the Fed might stick to its aggressive stance to tame decades-high inflation.

“Markets are looking like they’ve got a little window here for a relief rally before next week’s CPI data, since we were oversold here,” said Dennis Dick, a market structure analyst and trader at Triple D Trading.

“You’re just starting to see a few people coming in buying the dip.”

The producer price index and the University of Michigan’s consumer sentiment survey on Friday and November’s consumer price data next week will also be in focus ahead of Fed’s policy decision on Dec. 14.

Investors see a 93% chance that the U.S. central bank will hike the key benchmark rate by 50 basis points to 4.25-4.50%, with the rates peaking in May 2023 at 4.92%.

The U.S. central bank has raised its policy rate by 375 basis points this year, the fastest pace since the 1980s.

This aggressive approach has stoked worries of a recession, with top executives of major U.S. financial institutions including JPMorgan, BlackRock and Citi forecasting a likely economic downturn in 2023.

Adding to the fears, the yield curve between the 2-year and 10-year Treasury notes has also widened in the recent days.

By 1:46 p.m. ET, the Dow Jones Industrial Average (.DJI) rose 256.92 points, or 0.76%, to 33,854.84; the S&P 500 (.SPX) gained 38.46 points, or 0.98%, at 3,972.38; and the Nasdaq Composite (.IXIC) added 158.93 points, or 1.45%, at 11,117.48.

All 11 major S&P 500 sectors rose, led by a 1.8% gain in technology stocks (.SPLRCT).

Most mega-cap technology and growth stocks such as Apple Inc (AAPL.O), Nvidia Corp (NVDA.O) and Amazon.com Inc (AMZN.O) rose between 1.6% and 5%.

The energy index (.SPNY) was barely changed despite Exxon Mobil Corp gaining 1.2% after announcing it would expand its $30-billion share repurchase program. The sector had been under pressure in recent sessions as commodity prices slipped: U.S. crude is now hovering near its level at the start of 2022.

Meanwhile, Moderna Inc (MRNA.O) advanced 2.3% after the U.S. Food and Drug Administration authorized COVID-19 shots from the vaccine maker that target both the original coronavirus and Omicron sub-variants for use in children as young as six months of age.

The regulator also approved similar guidance for fellow COVID vaccine maker Pfizer Inc (PFE.N), which rose 2.7%, and its partner BioNTech, whose U.S.-listed shares gained 4.2%.

Rent the Runway Inc (RENT.O) jumped 61% after the clothing rental firm raised its 2022 revenue forecast.


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