Extending the rebound seen during Wednesday’s session, stocks moved sharply higher during trading on Thursday. The major averages further offset the notable pullback seen to start the week, with the Nasdaq and the S&P 500 bouncing back to record intraday highs.

The tech-heavy Nasdaq (NASDAQI:COMP) surged 241.83 points or 1.5 percent to 16,273.38, ending the day just shy of last Friday’s record closing high, while the S&P 500 (SPI:SP500) managed to set a new record closing high, jumping 52.60 points or 1.0 percent to 5,157.36. The narrower Dow (DOWI:DJI) posted a more modest gain, rising 130.30 points or 0.3 percent to 38,791.35.

The extended rebound on Wall Street came as optimism about the outlook for interest rates continued to inspire traders to get back into the markets following the pullback seen on Monday and Tuesday.

After saying rate cuts were likely this year during Congressional testimony on Wednesday, Federal Reserve Chair Jerome Powell doubled-down during remarks today, saying cuts “can and will” begin this year.

While Powell also reiterated officials needs “greater confidence” inflation is slowing, traders remain optimistic the Fed will begin cutting rates in June.

Adding to the optimism about interest rates, the European Central Bank lowered its annual inflation forecast while announcing its widely expected decision to leave rates unchanged.

Potentially adding to the buying interest on Wall Street, treasury yields saw further downside on the day, with the ten-year yield falling to its lowest closing level in a month.

Sector News

Semiconductor stocks led the way higher, with the Philadelphia Semiconductor Index soaring by 3.4 percent to a record closing high.

Shares of Nvidia (NASDAQ:NVDA) shot up by 4.5 percent after Mizuho Securities raised its price target on the AI darling to $1,000 per share, while Micron (MU) surged by 3.6 percent after Stifel upgraded its rating on the chipmaker’s stock to Buy from Hold.

Considerable strength was also visible among oil service stocks, as reflected by the 1.9 percent jump by the Philadelphia Oil Service Index. The strength in the sector came despite a modest decrease by the price of crude oil.

Housing stocks also showed a strong move to the upside, driving the Philadelphia Housing Sector Index up by 1.6 percent to a record closing high.

Software, gold and retail stocks also saw notable strength on the day, while networking stocks were among the few groups to buck the uptrend.

Economic News

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits came in unchanged from an upwardly revised level in the week ended March 2nd.

The Labor Department said initial jobless claims came in at 217,000, unchanged from the previous week’s revised level.

Economists had expected jobless claims to come in unchanged compared to the 215,000 originally reported for the previous week.

The Commerce Department also released a report showing the U.S. trade deficit widened in the month of January amid a jump in the value of imports.

The report said the trade deficit increased to $67.4 billion in January from a revised $64.2 billion in December.

Economists had expected the trade deficit to widen to $63.5 billion from the $62.2 billion originally reported for the previous month.

The wider trade deficit came as the value of imports jumped by 1.1 percent to $324.6 billion, while the value of exports inched up by 0.1 percent to $257.2 billion.

A separate Labor Department report said the surge in labor productivity in the fourth quarter was unrevised at 3.2 percent, while the increase in unit labor costs was downwardly revised to 0.4 percent from 0.5 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index slumped by 1.2 percent and 1.3 percent, respectively, while Australia’s S&P/ASX 200 Index rose by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index advanced by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries showed a lack of direction before eventually closing modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.2 basis points to a one-month closing low of 4.092 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the Labor Department’s monthly jobs report for February and its impact on the outlook for interest rates.

Economists currently expect employment to jump by 200,000 jobs in February after surging by 353,000 jobs in January, while the unemployment rate is expected to come in unchanged at 3.7 percent.

Source: RTTNEWS