By Caitlin Ostroff and Amber Burton
U.S. stocks rose Thursday, rebounding after fresh data showed
jobless claims dropped and the economy expanded sharply in the
third quarter.
The Dow Jones Industrial Average gained 139.16 points, or 0.5%,
to 26659.11, snapping a four-session losing streak. The S&P 500
added 39.08 points, or 1.2%, to 3310.11. The Nasdaq Composite
advanced 180.72 points, or 1.6%, to 11185.59. All three indexes are
still on course for sharp weekly losses.
The Cboe Volatility Index, a gauge of investors' expectations
for swings in U.S. stocks, fell but remains near its highest level
since June.
In the week ended Saturday, 751,000 Americans applied for
initial unemployment benefits, down from a seasonally adjusted
791,000 in the prior week. The decline is a sign that the labor
market is slowly recovering, though claims remain at historically
high levels.
Meanwhile, U.S. gross domestic product for the third quarter
rose at an annual pace of 33.1%, the biggest gain ever. The
increase followed a record drop in output earlier in the year when
the virus and related shutdowns disrupted business activity across
the country.
Stocks rose ahead of results from the big technology companies
that have powered much of the stock market's rebound since
March.
After the closing bell, Apple, Alphabet, Amazon.com and Facebook
all reported stronger-than-expected earnings, buoyed by changes in
consumer behavior during the pandemic. The stocks have posted
sweeping gains this year.
Alphabet shares were the biggest winners in after-hours trading,
gaining 8% as Google's parent reported an increase in advertising
revenue. Apple shares dropped 4% after the iPhone maker refrained
from offering guidance, and Twitter slumped 15% on slowing user
growth.
The handful of stocks now account for a significant portion of
the S&P 500 benchmark. That means investors' perception of the
health of their operations can weigh on broader market sentiment
and lead to volatility in the index.
Tim Courtney, chief investment officer at Exencial Wealth
Advisors, said he expects markets will remain volatile for the near
future.
"We're going to have volatility probably through the end of the
year, probably into next year until we start to get clarification
on regulation of the tech industry and whether or not it looks like
a vaccine is coming," he said.
Mr. Courtney said he remains relatively unfazed by the way the
markets are jumping around because of the unique circumstances of
rising Covid-19 cases and the election.
Worries that an uptick in Covid-19 cases will lead to new
lockdowns and restrictions, which could erode the pace of economic
recovery, have weighed on markets this week in both the U.S. and
Europe. The U.S. reported nearly 79,000 new coronavirus cases for
Wednesday, the second day in a row the total has come in over
70,000, according to data compiled by Johns Hopkins University.
France and Germany on Wednesday unveiled new restrictions on
business and social activity, including shutting down restaurants,
bars and some shops for a few weeks to stem the rising tide of
infections. Leaders in both countries aimed to cushion the economic
impact of the restrictions, saying factories and schools would
remain open.
"If you look at the market action in the last week, it's pretty
clear that Covid-19 is the key market mover," said Luca Paolini,
chief strategist at Pictet Asset Management.
The U.S. election also remains in focus, with many investors
remaining cautious about placing big bets ahead of the Nov. 3
vote.
Still, this week's selloff could present a buying opportunity
for some investors, and help stock indexes recover some losses.
"The phenomenon that we've seen is that when markets correct,
you get people to come in and think this is an opportunity to buy,"
said Daryl Liew, chief investment officer at REYL Singapore. "The
reality is that investors still have a lot of cash. It's not a
liquidity crisis for most people."
Among individual movers, Ford Motor shares rose 20 cents, or
2.6%, to $7.90, after the company reported stronger-than-expected
earnings. Shares of Boston-based drugmaker Alexion Pharmaceuticals
rose $3.36, or 2.9%, to $118.21, after it reported
better-than-expected profit and sales.
Shares of Kraft Heinz gained 82 cents, or 2.8%, to $30.04, after
the company reported earnings that beat analysts' expectations and
raised its guidance.
In bond markets, the yield on the 10-year Treasury ticked up to
0.834%, from 0.780% Wednesday.
In commodities, oil extended its selloff. Brent crude, the
international gauge, retreated 3.8% to $37.65 a barrel.
The ICE U.S. Dollar Index, which measures the greenback against
a basket of currencies, gained 0.6%. The dollar typically rises
when stock indexes fall due to its status as a haven currency.
Overseas, the Stoxx Europe 600 ticked down 0.1%. In the
Asia-Pacific region, stock benchmarks were mixed. The Shanghai
Composite Index edged up 0.1% while Australia's benchmark
S&P/ASX 200 declined 1.6%.
--Joanne Chiu contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
October 29, 2020 17:26 ET (21:26 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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