In this article:
Wall Street closed higher on Thursday, led by a rally triggered by a mega-cap tech giant. Investors, who have been worried in recent sessions about economic data reflecting the economy going into recession, capped the holiday-shortened week on a high. Two of the three major indexes ended in the green, while one remained flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) remained virtually flat to close at 33,485.29. Fifteen components of the 30-stock index ended in positive territory, while 15 ended in negative.
The S&P 500 added 0.4% or 14.64 points to close at 4,105.02. Eight of the 11 broad sectors of the benchmark index ended in positive territory. The Communication Services Select Sector SPDR (XLC), the Utilities Select Sector SPDR (XLU) and the Real Estate Select Sector SPDR (XLRE) gained 1.3%, 0.7% and 0.7%, respectively, while the Energy Select Sector SPDR (XLE) lost 1.5%.
The tech-heavy Nasdaq gained 0.8% or 91.10 points to finish at 12,087.96.
The fear-gauge CBOE Volatility Index (VIX) was down 3.6% to 18.40. A total of 9 billion shares were traded on Thursday, lower than the last 20-session average of 12.7 billion. Advancers outnumbered decliners on the S&P 500 by a 1.20-to-1 ratio.
Markets Pricing in Possible Rate Reductions in Second Half of 2023
A general change in investor mood was witnessed this past week as weak economic numbers pushed investors into a sell-off mode. This may be considered as a paradigm shift because till this point in time, whenever economic numbers from various sectors have shown signs of slowing down, market participants have rejoiced, as they have seen it as facilitating the Federal Reserve into loosening its monetary policy.
However, as a resultant effect of the banking crisis in March, investors have started pricing in a rate-hike pause, and even a rate reduction process to start from the second half of this year. This is the principal reason why investors have been able to come out of the “bad news is good news” mentality and are evaluating signs for what they are. The Fed is bound to cut rates in that eventuality anyway, so signs of a weakening economy cannot be good.
Google Leads Tech Turnaround
The S&P 500 was able to cut its losses for the week on Thursday with a tech turnaround led by Alphabet Inc. GOOGL, which advanced 3.8%. Google’s fortunes shot up, with the Wall Street Journal reporting that it was on the verge of adding artificial intelligence features to its search engine.
Consequently, shares of Meta Platforms, Inc. META and Microsoft Corporation MSFT gained 2.2% and 2.6%, respectively. Meta carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.