Dow, S&P set for slight gains in busiest day of earnings season

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Major U.S. stock-market benchmarks climbed Thursday, lifting the S&P 500 index and Nasdaq Composite to new records as better unemployment data, falling coronavirus cases and deaths, some upbeat corporate earnings and the prospect of more fiscal stimulus augured well for further economic recovery this year.

How did stock benchmarks do?

  • The Dow Jones Industrial Average rose 332.26 points, or 1.1% at 31,055.86.
  • The S&P 500 index added 41.57 points, or 1.1%, to end at 3,871.74, passing its closing high of 3855.36 on Jan.25.
  • The Nasdaq Composite Index added 167.2 points, or 1.2%, to 13,777.74, ending above its 13,635.99 all-time closing peak set on Jan. 25.
  • The Russell 2000 climbed 1.8%, setting a new record.

On Wednesday, the S&P 500 and the Dow booked their third straight gains but the Nasdaq Composite closed lower.

What drove the market?

Market participants were heartened by U.S. jobless benefit claims falling for a third straight week to the lowest number of claims since November, but the reading remains elevated compared to pre-pandemic levels.

U.S. initial jobless claims fell by 33,000 to 779,000 at end of January, compared with economists’ consensus estimates for 835,000 from 847,000 the week before, according to economists surveyed by Econoday. The report comes ahead of the official January employment report due on Friday from the Labor Department.

“Claims are running three to four times more than during the pre-pandemic period.  We still have an enormous unemployment issue,” said Matt Forester, chief investment officer of BNY Mellon’s Lockwood Advisors, in e-mailed comments.

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Thursday also marked a busy day of earnings and economic reports with investors looking for signs that the economy is rebounding from the COVID-19 pandemic, despite an elevated case numbers and the emergence of new variants of the coronavirus amid the rollout of effective vaccines.

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In earnings, no fewer than 42 companies reported quarterly results on Thursday, representing the busiest day on the calendar for fourth-quarter results.

Headliners included Ford Motor  and Snapchat parent Snap Inc. and also include results from the likes of Clorox Co. Yum Brands and Merck & Co. which announced that Kenneth Frazier, its CEO would be stepping down after 10 years at the helm of the drug company.

See: S&P 500 earnings recession set to end, as Q4 EPS swings to growth

In public health news, the U.S. averaged 136,438 new cases a day in the past week, down 30% from the average two weeks ago. Hospitalizations have also been falling, according to the COVID Tracking Project. There were 91,440 COVID-19 patients in U.S. hospitals on Wednesday, down from 92,880 a day earlier and the lowest level since Nov. 27. 

Against that backdrop, investors are also awaiting the next steps on a new fiscal relief package. President Joe Biden said he was open to sending $1,400 payments to a smaller group of Americans in the next round of coronavirus aid and changing the overall price tag of his $1.9 trillion plan, The Wall Street Journal reported.

Also on investors’ radar was a meeting of financial regulators, including Treasury Secretary Janet Yellen, to discuss the market volatility related to GameStop Corp. and AMC Entertainment Holdings and other so-called meme stocks.

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In other economic reports, U.S. productivity dropped to a 4.8% annual rate in the fourth quarter. Separately, U.S. factory orders for manufactured goods rose 1.1% in December after a 1.3% gain in the prior month, the Commerce Department said Thursday. Economists surveyed by The Wall Street Journal were expecting a 0.7% gain.

Which stocks were in focus?

  • Shares of Merck slipped 1.7% Thursday, after the drugmaker reported a fourth-quarter profit that missed expectations, but revenue that beat and provided and upbeat full-year outlook.
  • Clorox fell 6.3% after the maker of cleaning products and household goods posted stronger-than-expected earnings for its fiscal second quarter.
  • Costco Wholesale CorpCOST were in focus after the retailer on Wednesday reported net sales of $13.64 billion for the retail month of January, up 18% from $11.57 billion in the same month a year ago. Shares gained 0.4%.
  • Shares of Hershey Corose 0.4% after the chocolate and confectionary products company reported fourth-quarter profit and sales that rose above expectations, helped by market share gains and volume growth.
  • Yum Brands stock was up 1.7% Thursday after the fast-food company reported fourth-quarter earnings that beat expectations.
  • Tapestry Inc.‘s stock rose 4.6% after the luxury fashion and accessories company reported fiscal second-quarter earnings and sales that beat expectation.
  • Bristol-Myers Squibb Co.  said Thursday it had a net loss of $10.027 billion, or $4.45 a share, in the fourth quarter, wider than the loss of $1.056 billion, or 55 cents a share, posted in the year-earlier period. Shares were up 0.8%.
  • Shares of New York Times Co.  closed up 1.2%after the media and newspaper company reported fourth-quarter adjusted profit and revenue beats, as strength in subscription revenue offset weakness in advertising.
  • Quest Diagnostics Inc. said Thursday its board has approved a 10.7% increase in its quarterly dividend to 62 cents a share. Shares were down 3.9%
  • GameStop shares fell 42%, and AMC Entertainment shares slipped 21%.

How did other assets fare?

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