US Stocks Close Higher Thursday 10/22 16:05
U.S. stocks overcame a wobbly start to finish higher Thursday, as traders
welcomed more corporate quarterly results for the summer that weren't as bad as
Wall Street feared.
(AP) -- U.S. stocks overcame a wobbly start to finish higher Thursday, as
traders welcomed more corporate quarterly results for the summer that weren't
as bad as Wall Street feared.
The S&P 500 rose 0.5% after shifting between small gains and losses
throughout the morning. The index recouped all of its losses from a day
earlier, but remains on track for its first weekly loss after notching a gain
in each of the previous three weeks.
Health care companies, banks, and communication services stocks accounted
for most of the gains. Energy stocks also rose as the price of U.S. crude oil
pushed 1.6% higher. Those gains outweighed losses by technology companies and
elsewhere in the market. Treasury yields rose, a sign that investors are
feeling better about the economy.
After a downbeat start, stocks wobbled for a bit as traders weighed
encouraging economic new data on weekly U.S. unemployment aid claims and
September home sales. The indexes flipped into the green by midafternoon after
House Speaker Nancy Pelosi said that negotiations for another round of economic
stimulus were progressing.
The day's gyrations echo the market's meandering trading in recent weeks as
investors gauge the chances of Washington reaching a deal on more support for
the economy. Time is running out to get something done before the election,
which has dimmed some of the optimism that Democrats and Republicans will soon
strike a bargain on an aid package.
"I have very low expectations for a stimulus deal, but the economic news and
corporate earnings news is pretty good, and that's encouraging," said Phil
Orlando, chief equity strategist at Federated Hermes.
The S&P 500 rose 17.93 points to 3,453.49. The Dow Jones Industrial Average
gained 152.84 points, or 0.5%, to 28,363.66. The Nasdaq composite added 21.31
points, or 0.2%, to 11,506.01.
Smaller company stocks fared better than the rest of the market. The Russell
2000 small-cap index climbed 26.48 points, or 1.7%, to 1,630.25.
Investors have been hoping Washington will provide more aid for the economy,
which continues to struggle due to the pandemic. The last round of beefed-up
aid for unemployed Americans expired at the end of July. Any compromise will
likely face stiff resistance from Republicans in the Senate.
Pelosi and Treasury Secretary Steven Mnuchin have been negotiating daily
this week on a possible aid package. On Thursday, Pelosi said that progress is
still being made.
"Help is on the way. It will be bigger, it will be better, it will be safer
and it will be retroactive," she said.
A piece of such a deal could include extra benefits for workers who lost
their jobs due to the coronavirus pandemic. A report on Thursday morning showed
that 787,000 workers applied for unemployment benefits last week.
While that's still an incredibly high number relative to history, it's down
from 842,000 the prior week. It also was not nearly as bad as economists were
The number of workers continuing to get jobless benefits is likewise easing
from its pandemic-era peak. That's a sign that some people have been able to
find new jobs, but it also shows that others are simply using up the last of
their state unemployment benefits.
The economy continues to show signs of overall improvement, said Jeff
Buchbinder, equity strategist at LPL Financial, including solid gains in retail
sales in September. That has dampened some of the immediate need for more
stimulus, but high unemployment is still a problem.
"There's a ways to go, but the outperformance of the U.S. economy over the
last several months clearly reduced the need for stimulus," he said. "There's
widespread agreement that more stimulus is needed, but it may be more targeted."
Another report showed that sales of previously occupied homes accelerated
even more last month than economists expected. Low mortgage rates are driving
the action, as is a surge in interest in homes in Lake Tahoe and other resort
areas as people look to work from home in more attractive locales, according to
the National Association of Realtors.
Big companies, meanwhile, continue to report profits for the summer that
took a hit from the coronavirus-caused recession. But they're mostly not as bad
Align Technology, which makes Invisalign teeth straighteners, surged 35% for
the biggest gain in the S&P 500 after its earnings report blew past Wall
Street's expectations. Stronger sales to teenagers helped the company more than
triple analysts' expectations for earnings per share.
The stock's surge helped drive health care to the biggest gain among the 11
sectors that make up the S&P 500.
AT&T strengthened by 5.8% after it reported revenue for the latest quarter
that beat analysts' expectations. Coca-Cola gained 1.4%, and Tesla rose 0.7%
after both reported earnings that topped Wall Street's forecasts.
On the losing end were several Big Tech companies. Amazon fell 0.3% and
Apple dropped 1%.
Those declines are slight, particularly when compared with the gargantuan
gains the stocks made earlier this year. Big Tech companies have grown so
massive in size that their stock movements have outsized sway on the S&P 500
and other indexes that are based on the market value of companies.
Overall, earnings have so far been stronger than expected, Buchbinder said,
which is a good sign for the economy moving forward.
"The most important thing for the market is to know that the economic
recovery is continuing," he said. "Investors are hoping to hear from companies
that economic conditions are improving."
The yield on the 10-year Treasury rose to 0.86% from 0.83% late Wednesday.
It's still close to its highest level since June.
European markets ended mostly lower, and Asian markets were mixed.