Topline
Stocks regained their footing Thursday, rallying across the board as all three major U.S. indexes tallied major gains, though each remain well behind their all-time highs booked in July.
Stocks went back up Thursday.
Key Facts
The bellwether S&P 500 had its best day since Nov. 2022, gaining 2.3%, the tech-heavy Nasdaq Composite delivered its strongest gain since February, surging 2.9%, and the blue chip Dow Jones Industrial Average had its best day since July, rallying 1.8%, or 6.8 points.
Gains were widespread, with 90% of S&P constituents closing trading in the green and 12 of the index’s 13 sectors enjoying a 0.8% or better jump (utilities lagged with a 0.2% rise).
Notable individual risers included pharmaceutical giant Eli Lilly (up 9%), Silicon Valley giants Broadcom (7%), Intel (6%) and Nvidia (8%).
The rally came as panic about an imminent U.S. recession continued to unwind, with Thursday morning’s better-than-expected weekly unemployment claims sparking the stock gains.
The Dow is up 3% from its Monday intraday bottom, the Nasdaq 6% and the S&P 4%.
Contra
Before declaring the stock market slump over, the three major indexes still sit far below their July peaks, with the Nasdaq remaining in a more than 10% correction from its high and the Dow and S&P sitting 4% and 6% below their July closing highs, respectively. The U.S. is also not out of the woods in terms of a recession, with firms like JPMorgan Chase assigning 35% odds of such a downturn by the end of the year. Stocks are hardly valued as if investors expect a major slowdown in broader growth, as the S&P’s price-to-earnings ratio, which tracks company valuations compared to profits, is about 25% above its 20-year average, according to FactSet.
Key Background
Up almost 12% year-to-date, including dividends, the S&P is comfortably on track to match its average annual return of 9.5% over the last 50 years. Pullbacks are a common trait of stock markets, and 5% or more pullbacks have occurred an average of three times annually dating back to the 1930s, according to Wells Fargo research.
Further Reading
ForbesInitial Jobless Claims Better Than Forecasted As Recession Alarms EaseBy Derek Saul
