S&P 500 jumps to record high Thursday as investors await Powell speech

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The S&P 500 index carved out an intraday record early Thursday, with technology shares helping, while the Dow was lagging, ahead of expected comments on the global economy from Federal Reserve Chairman Jerome Powell.

A weekly report on those seeking unemployment benefits in the U.S. showed an unexpected rise, perhaps reinforcing the Fed’s concern about the labor market’s recovery from COVID.

How are stock benchmarks faring?

  • The Dow Jones Industrial Average fell 40 points, or 0.1%, to trade at around 33,407, weighed by declines in shares of Goldman Sachs Group and Boeing Co.
  • The S&P 500 was gaining 11 points to reach about 4,090, a gain of 0.3%, after earlier establishing an intraday record at 4,093.87.
  • The Nasdaq Composite Index advanced 97 points, or 0.7%, at 13,785.

On Wednesday, the S&P 500 added 6.01 points, or 0.2%, enough to finish at a record 4,079.95, its 18th of the year. The Dow rose 16.02 points, or 0.1%, to close at 33,446.26, its second-highest finish ever, the Nasdaq Composite shed 9.54 points, or 0.1%, ending at 13,688.84, while booking a second day in a row of losses. The small-cap oriented Russell 2000 index slumped 1.6% to close at 2,223.05.

What’s driving the market?

Fed Chairman Powell is set to discuss the global economy at a webcast conference hosted by the International Monetary Fund at 12 p.m. Eastern Time Thursday, a day after minutes from the Federal Reserve’s March policy meeting were released showing concerns about the recovery in the job market.

Video: Stocks set for a higher open following Wednesday’s mixed session (CNBC)

Stocks set for a higher open following Wednesday’s mixed session
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“With the tick up in jobless claims this week, we’re back up to the elevated levels we saw to kick off the year,” wrote Mike Loewengart, managing director investment strategy at E-Trade Financial.

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U.S. weekly jobless benefit claims, may reinforce that notion, showing a rise of 16,000 to 744,000, above expectations for 694,000 from economists surveyed by Dow Jones. Claims were raised to 728,000 in the prior week from the prior estimate of 719,000.

“So while states balance the vaccine rollout with stop and start reopening plans, the labor market continues to feel the heat. But the disappointing read actually puts some firepower behind the Fed’s accommodative stance,” the E-Trade executive said.  

However, continuing claims dropped 16,000 to 3.73 million, marking the lowest level for that measure of employment since March 21, 2020.

“Bottom line, with as of 7.4mm job openings thru February, and assume they are more since then, this level of claims is somewhat confounding but still points to the speculation as to what impact generous unemployment benefits are doing to people’s incentive to get a job,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.

The Fed in its minutes on Wednesday also communicated that it will be “some time” before any tapering of the central bank’s monthly asset-purchase program, or before benchmark interest rates are lifted from current levels near 0%. That sentiment may be enough to keep markets aloft—at least for the moment.

“We expect the market to keep moving slowly higher on good economic news, but since most of that news is already priced in, a big move higher (or a big move lower) will only happen if there is a significant bump to the upside (or unexpected drop to the downside) in a major piece of economic news, such as the quarterly GDP number that will be released at the end of April,” wrote Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance in a note after the jobless claims data.

Which companies are in focus?

  • Canopy Growth CorpCGC said Thursday that it will acquire Toronto-based Supreme Cannabis Co. IncSPRWFin a stock and cash deal valued at about C$435 million ($345.6 million).
  • Telsa Inc.  TSLA has expressed frustration with red tape it says is hampering the construction of a new gigafactory outside the German capital Berlin, and has now offered its own reform proposals to the German authorities, AFP reported.
  • Shares of Valero Energy CorpVLO fell in premarket trading Thursday, after the maker of transportation fuels and petrochemical products provided a downbeat outlook for the first quarter, citing higher-than-expected costs resulting from the impact of Winter Storm Uri on its refining and ethanol business.
  • Constellation Brands IncSTZ posted stronger-than-expected earnings for its fiscal fourth quarter Thursday although profit fell from the year-earlier period.
  • Cloud company Box Inc. BOX said Thursday it has reached an agreement with private-equity firm KKR KKR in which KKR funds will lead a $500 million investment in the company in the form of convertible preferred stock.
  • Shares of GameStop Corp. GME rallied in premarket trading Thursday, putting them on track to snap a three-day losing streak, after the videogame and consumer electronics retailer said it plans to name Ryan Cohen as chairman of the board. Kathy Vrabeck is currently board chair.
  • Shares of Conagra Brands Inc. CAG edged up in premarket trading Thursday, after the food company, which brands include Birds Eye, Healthy Choice, Slim Jim and Reddi-wip, reported fiscal third-quarter profit and sales that rose above expectations.

How are other assets faring?

  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.3% at 92.189.
  • Oil futures fell after a report showed gasoline supplies were up, with the U.S. benchmark CL.1 down 0.8% at $59.30 a barrel on the New York Mercantile Exchange.
  • Gold futures traded higher, with the June contract GCM21 up 0.8% at $1,755.60 an ounce on Comex.
  • In Europe, the Stoxx 600 index SXXP was trading 0.4% higher, and London’s FTSE 100 UKX also was rising by about that much.
  • In Asia, the Shanghai Composite SHCOMP finished 0.1% higher, Hong Kong’s Hang Seng HSI closed up 1.2%, while Japan’s Nikkei 225 NIK edged down less than 0.1%.
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