Market Snapshot: Dow bounces higher early Thursday as tech attempts to rebound for a second session

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U.S. stock benchmarks early Thursday were trading firmly higher, but off their best levels, as investors found reasons to buy assets after a round of economic reports and a policy update from the European Central Bank.

Technology shares turned higher in the premarket for a second day to extend a Wednesday bounceback after the Nasdaq fell into correction on Tuesday, retreating from record highs seen just last week.

What are major benchmarks doing?

The Dow Jones Industrial Average DJIA, -0.44% jumped nearly 150 points, or 0.5%, at 28,091; while S&P 500 SPX, -0.42% climbed 20 points, or 0.6%, to reach about 3,419. The Nasdaq Composite Index COMP, -0.18% was up 125 points, or 1.1%, at around 11,267.

Stocks bounced Wednesday after a rout that pushed the Nasdaq Composite into correction territory, falling more than 10% from a record close. The Dow Jones Industrial Average on rose 439.58 points, or 1.6%, to finish at 27,940.47, while the S&P 500 advanced 67.12 points, or 2%, to close at 3,398.96. The Nasdaq Composite advanced 293.87 points, or 2.7%, ending at 11,141.56.

What’s driving the market?

A day after the market’s rebound from a three-day sell off, investors were being driven higher after a fresh batch of U.S. economic data and the latest policy update from the European Central Bank.

A report on U.S. weekly jobless benefit claims, one of the key pieces of economic data amid the coronavirus pandemic, came in weaker-than-expected, with initial jobless claims at 884,000, compared with the 850,000 expected by economists surveyed by Dow Jones. The total was unchanged from the previous week, the Labor Department said.

Continuing claims from those filing for at least two weeks rose from the previous week, hitting 13.385 million, an increase of 93,000 from a week ago and an indicator that the strong jobs improvement through the summer may be tailing off entering the fall.

Still, investors attempted to push stocks higher.

“Bottom line, economic growth will rebound sharply in Q3 and again in Q4 but these labor market stats still point to a long way to go in terms of hiring,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a note.

“These numbers also reflect more than a month without expanded benefits of $ 600 per week,” he said.

Separately, the U.S. August producer-price index rose 0.3% month-over-month, above expectations of 0.2%. Core PPI, excluding volatile energy prices, rose 0.4%, above expectation of 0.2%.

Investors remain focused on tech and other megacap tech stocks, including Apple Inc. AAPL, -1.33%, Facebook Inc. FB, -0.19%, Inc. AMZN, +0.41%  and Microsoft Corp. MSFT, -0.88%, which had led a surge that many investors felt had become euphoric before the Nasdaq’s selloff.

Analysts said the selloff, relative to the size of the rally from the March pandemic lows, marked less of retreat than meets the eye.

“While a drop of this size from the peak sounds like a steep correction, it remains a minor one given the index had rallied 83% from the March lows in a mere five months,” said Hussein Sayed, chief market strategist at FXTM, referring to the Nasdaq-100 Index NDX, -0.18%. “With a price to earnings ratio of 36, valuations for the index are still significantly overstretched, hence we should expect more volatility in the weeks to come heading into the U.S. presidential election” in November, he said, in a note.

Indeed, while equity markets appeared more calm, analysts said volatility was unlikely to fade away.

“We’ve seen an excessive amount of volatility over the last week and the tech sector has only been set back a month. That’s not to say we’re definitely going to see further sharp falls but it should perhaps be approached with caution,” said Craig Erlam, senior market analyst at Oanda Europe, in a note.

Investors also parsing moves by the European Central Bank, which left its policy unchanged at minus 0.5% and its refinancing rate at 0%, while reaffirming it plans to leave rates at present or lower levels until inflation rises to converge with its target at 2%.

At the news conference with ECB President Christine Lagarde’s, which began at 8:30 a.m. Eastern, the central bank has so far adopted a dovish tone, with Lagarde saying that the unwelcome strength of the euro was discussed by policy makers but isn’t something that the bank targets.

“The ECB’s admission that the euro’s recent strength is not a significant worry will help propel the currency higher, likely prompting even more alarm behind the ECB’s closed doors,” wrote Seema Shah, chief strategist at Principal Global Investors, in a note.

“However, even if Christine Lagarde’s every word had been directed at containing the Euro’s appreciation, that would have been hopelessly optimistic,” the analysts wrote.

Meanwhile,the 30-year fixed-rate mortgage hit a new record low, averaging 2.86% for the week ending Sept. 10, falling 13 basis points from the week prior, Freddie Mac reported Thursday. The previous record low was set in early August at 2.88%. In comparison, these loans had an average rate of 3.56% a year ago.

Which companies are in focus?
  • Shares of ZScaler Inc. ZS, +2.22%  were up 2.9% after the cloud-focused security-software company delivered results for its fiscal fourth-quarter and a fiscal new year outlook that topped expectations.
  • GameStop Corp. GME, -8.13% shares were down nearly 15% after the videogame-rental chain reported fiscal second-quarter results that disappointed expectations.
  • Shares of Citigroup Inc. C, -0.14%  rose 1.2% Thursday, after the bank said CEO Michael Corbat announced plans to retire, after about eight years in the role and 37 years at the bank. He will retire and step down from the board of directors in February 2021. The bank said Jane Fraser, currently the CEO of global consumer banking, will succeed Corbat as CEO in February.
  • Short seller Hindenburg Research published a report on electric truck maker Nikola Inc. NKLA, -9.79%   on Thursday, accusing it of being an “intricate fraud” built on lies told by its Founder and Executive Chairman Trevor Milton over many years. Shares were down 6.8%.
What are other markets doing?

The yield on the 10-year Treasury note TMUBMUSD10Y, 0.714%  fell 0.4 basis point to 0.698%. Bond prices move inversely to yields.

The ICE U.S. Dollar Index DXY, -0.30%, which tracks the performance of the greenback against its major rivals, was down 0.2%.

Gold futures GCZ20, +0.38% rose 0.7% to $ 1,968.30 an ounce. The U.S. crude oil benchmark CL.1, -1.18%  fell 0.8% to $ 37.76 a barrel.

The Stoxx Europe 600 index SXXP, -0.56%  was down 0.5%, while the U.K.’s benchmark FTSE UKX, -1.35% lost 1%. In Asia, Hong Kong’s Hang Seng Index HSI, -0.63% and the Shanghai Composite Index SHCOMP, -0.60%  both fell 0.6%, while Japan’s Nikkei NIK, +0.88% rose 0.9%.

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