Stock indexes ended another day of wobbly trading on Wall Street, with a uneven end Thursday that included more all-time highs in the S&P 500 as well as the Nasdaq.
The benchmark S&P 500 index rose 0.4%, increasing its winning streak to six days. The record-breaking closes have been recorded on a number of days when the market was experiencing a slow start.
The Nasdaq gained 0.8%, marking its ninth straight gain and the latest record for this tech-heavy index. The Dow Jones Industrial Average lost 0.1%, ending its five-day winning streak.
The S&P 500 saw a greater decline in companies than it did a rise, however, gains made by many large technology companies outweighed any losses elsewhere on the market.
Despite the mixed results, market milestones highlight how traders are still in a buying mood. This is encouraged by solid company earnings as well as the Federal Reserve’s decision to slowly reverse policies that were intended to spur U.S. growth during the recession.
The Fed announced Wednesday that it would reduce its $120 billion monthly bond purchases by $15 billion per month in the next few weeks. The central bank may decide to increase its short-term rate of interest, which has a significant impact on many business and consumer loans, from close to zero. Market watchers believe that the Fed is moving cautiously to reduce its support. This is good news for Wall Street.
Jay Hatfield, CEO, Infrastructure Capital Advisors, said that ninety percent of the stock market’s rise was due to ultra-loose monetary policies.
He said, “The exact mechanism that is causing inflation to rise also causes asset prices to rise. So therein lies the problem.” “The fact we won’t have a corporate tax hike is also extremely bullish.”
The S&P 500 gained 19.49 points to 4,680.06. The index is currently on track for its fifth consecutive weekly gain. This happened last July and August last year.
The Dow dropped 33.35 points at 36,124.23. While the Nasdaq gained 128.72 to 15,940.31.
Stocks of small companies also lost some ground. The Russell 2000 index fell 1.85 points or 0.1% to 2,402.43.
Investors continued to pay attention to the latest round corporate earnings. After it provided investors with a positive profit forecast and announced strong quarterly results, chipmaker Qualcomm saw 12.7% jump. Other chipmakers saw a similar rally. Advanced Micro Devices rose 5.3%, while Nvidia rose by 12%.
Solid gains were also seen in a mix of companies that depend on direct consumer spending for services and goods. Tesla’s stock rose 1.3%, surpassing its all-time high of 1.3% set just a day earlier.
Bond yields fell. The 10-year Treasury yield fell to 1.52%, from 1.58% on Wednesday. Banks, which depend on higher yields to charge lucrative interest on loans, were hit hard by the lower yields. Bank of America declined 2.2%
Electronic Arts gained 2.1% with solid earnings and financial forecasts, while Take-Two Interactive rose 4.8%.
Moderna fell 17.9% after reducing its forecast for how many vaccine delivery it expects to make in the coming year. Merck rose by 2.1% after British authorities approved the antiviral pill.
Investors should be concerned about the impact of supply chain disruptions on profits and operations. Roku is the latest victim of these disruptions and increased costs. After giving investors a poor sales forecast and warning that supply chains problems would likely continue into 2022, the video streaming company suffered a 7.7% drop.
According to Liz Ann Sonders (chief investment strategist at Charles Schwab), inflation concerns will focus investor attention more on how companies maintain profit margins throughout the year than on measuring profit growth.
She stated that “the market is realizing the tailwind of continuously improving earnings is fading.”
Investors were provided with a positive update about the state of the economy’s recovery. On Thursday, the Labor Department reported that the number of Americans applying unemployment benefits dropped to a new pandemic low. This is another indication that the market is recovering from last year’s recession caused by coronavirus. Friday will see the release of the agency’s more detailed October jobs report.
