Stocks Edge Higher as Jobless Claims Fall
29 May 2020 - 2:46AM
Dow Jones News
By Alexander Osipovich, Joe Wallace and Frances Yoon
U.S. stocks rose Thursday, extending their recent rally, after
data showed a drop in the number of Americans filing for
unemployment -- albeit from historically high levels.
The Dow Jones Industrial Average climbed 142 points, or 0.6%, in
midday trading, a day after the blue-chips gauge closed above 25000
for the first time since early March and posted its largest two-day
advance in more than a month.
The S&P 500 rose 0.7%, while the Nasdaq Composite gained
0.8%.
U.S. workers filed just over 2.1 million jobless claims last
week, extending a downward trend, but still at sharply elevated
levels from before the pandemic.
States and cities have been moving ahead with plans to let
businesses reopen, fueling optimism that the economy has turned a
corner. New data showed U.S. gross domestic product fell at a 5%
rate in the first quarter, slightly steeper than initially
estimated and the largest quarterly rate of decline since the last
recession.
"There is some optimism that the U.S. economy is moving
forward," said Jeffrey Schulze, an investment strategist at
ClearBridge Investments. "It's also important that there are no
signs of a second wave of infections."
Investors shrugged off concerns that fresh tensions between the
U.S. and China could lead to a renewed trade war. China forged
ahead on Thursday with a resolution to impose national-security
laws on Hong Kong in a bid to crush anti-Beijing protests.
That came a day after the House of Representatives passed a bill
to sanction Chinese officials involved in the suppression of Muslim
minority groups, and the State Department determined that Hong Kong
no longer has a high degree of autonomy from China--a move that
could open the way for President Trump to revoke special
arrangements on trade.
"It's just another potential concern on top of Covid," said
Brian O'Reilly, head of market strategy at Italian asset manager
Mediolanum. "Whether we actually get into trade war 2.0 -- I think
even in a second term for Trump, they'd be reticent to go down that
path."
Hong Kong's Hang Seng Index fell 0.7%, even as most other Asian
and European indexes posted gains.
In the U.S., nine of the S&P 500's 11 sectors were higher,
with utilities, health-care and consumer staples the best
performers. Only energy stocks and financials declined
Dollar Tree shares jumped 11% after the discount retailer posted
stronger-than-expected earnings for the first quarter, boosted by a
surge in demand for essential goods as homebound consumers stocked
up during the pandemic.
Shares of Boeing rose 3.2% after the aerospace giant laid out
plans to cut more than 13,000 jobs. HP shares fell 12% after the
information-technology company's first-quarter profit fell and it
pulled financial projections for the year.
A key question for investors is whether economically sensitive
stocks can extend their recent rally, said Hugh Gimber, a
strategist at J.P. Morgan Asset Management. "It's been the most
beaten-up sectors that have really caught the bounce," he said,
pointing to gains for shares in U.S. banks and travel
companies.
The rally in shares of technology companies has paused in recent
days, having powered much of the recovery in U.S. stocks since
March. They could come under further pressure in response to a
draft executive order that Mr. Trump is expected to sign Thursday,
Mr. Gimber said. The order would seek to limit the broad legal
protection that federal law currently provides social-media and
other online platforms, according to people familiar with the
draft.
Twitter shares dropped 2.7%. Mr. Trump lashed out at the company
this week after it added fact-checking notices to two of his
tweets.
Stocks are likely to pull back at some point given the degree of
uncertainty surrounding the global economy as lockdown measures are
relaxed, said Michael Drummey, head of U.S. equity risk trading at
Mizuho Americas LLC. "The market is acting in a way that doesn't
really line up with that uncertainty," he said. "We have a FOMO
rally -- a fear of missing out."
Overseas, the Stoxx Europe 600 rose 1.7% on Thursday. Japan's
Nikkei 225 jumped 2.3%.
Write to Alexander Osipovich at
alexander.osipovich@dowjones.com, Joe Wallace at
Joe.Wallace@wsj.com and Frances Yoon at frances.yoon@wsj.com
(END) Dow Jones Newswires
May 28, 2020 12:31 ET (16:31 GMT)
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