Tech Stocks Lead Rebound After Jobless Claims Drop

By Caitlin Ostroff and Julia Carpenter

U.S. stocks rebounded Thursday after jobless claims data showed that the labor market continued to recover, putting major indexes on track to snap a three-day losing streak.

Fresh data showed that 444,000 Americans applied for first-time unemployment benefits in the week ended May 15, down from 478,000 in the week prior. That is the lowest level since the pandemic hit in mid-March 2020.

Stocks and other risky assets had been under pressure this week following concerns that rising inflation and a speedy economic recovery could prompt central bankers to pare back easy-money policies.

"I think people are still concerned by the volatile moves that we're having in our market," said Jonathan Corpina, senior managing partner at Meridian Equity Partners. "In reality, people are still apprehensive about what the economy will look like one month from now, two months from now, six months from now."

The S&P 500 edged up 1.3%, while the Dow Jones Industrial Average gained nearly 1%. The technology-heavy Nasdaq Composite gained 1.8%.

Federal Reserve minutes showed that policy makers in an April meeting signaled their desire to start discussing a plan for reducing the Fed's massive bond-buying program at a future meeting. That briefly jolted stocks Wednesday afternoon as it eroded investors' risk appetite.

"The market is just very, very jumpy about inflation and the Fed," said Seema Shah, chief strategist at Principal Global Advisors. "It is a lot of knee-jerk reactions and then the market settles down a bit."

Markets are likely to be volatile until additional economic data provides a clearer picture, Ms. Shah said. "I don't think we could know anything really about which way inflation is going to go until September, but the market is unable to wait that long," she added.

The technology and communication services sectors led the way in the S&P 500, both rising more than 1.5%. Stocks in those sectors have been particularly sensitive to worries about rising interest rates, in part because their earnings are expected to come further in the future. Rising yields increase the value of current earnings relative to future ones.

Mr. Corpina points to the continued chip shortage as a lingering concern for some investors.

"Tech is in favor for today," Mr. Corpina said. "But it seems this market has a very short memory."

In bond markets, the yield on 10-year Treasury notes ticked down to 1.633%, down from 1.680% Wednesday. Yields fall when bond prices rise.

Bitcoin rose 11% to $41,573 following a frenzied selloff on Wednesday that saw cryptocurrencies plunge. Ether rose 5.8% $2,924, and dogecoin gained more than 20% to trade near 42 cents.

Shares of Virgin Galactic Holdings rose 9% after the aerospace and space-travel company confirmed that the next test flight of its SpaceShipTwo Unity will be conducted Saturday, pending weather and technical checks.

Overseas, the pan-continental Stoxx Europe 600 ticked up 1.3%. The major Asian indexes closed on a mixed note. China's Shanghai Composite Index edged 0.1% lower, South Korea's Kospi fell 0.3% and Hong Kong's Hang Seng declined 0.5%. Japan's Nikkei 225 advanced 0.2%.

Write to Caitlin Ostroff at [e-mail] and Julia Carpenter at [e-mail]

(END) Dow Jones Newswires

05-20-21 1225ET