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Stock Market News for Apr 10, 2023

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.

Economic Data

The Labor Department reported on Thursday that initial jobless claims fell to 228,000, decreasing 18,000 for the week ending Apr 1, from the previous week's revised level. The previous week's level was revised up by 48,000 from 198,000 to 246,000.The four-week moving average decreased to 237,750, marking a fall of 4,250 from the previous week’s revised average. The previous week's average was revised up by 43,750 from 198,250 to 242,000.

Continuing claims came in at 1,823,000 for the week ending Mar 25, increasing 6,000 from the previous week’s revised level. The previous week's numbers were revised up by 128,000 from 1,689,000 to 1,817,000. The 4-week moving average came in at 1,804,000, an increase of 10,500 from the previous week's revised average. This is the highest level for this average since Nov 13, 2021, when it was 2,007,000. The previous week's average was revised up by 101,750 from 1,691,750 to 1,793,500.

The Bureau of Labor Statistics reported that the unemployment rate decreased to 3.5% in March. In February, unemployment was reported at 3.6%. Average Workweek for March decreased to 34.4 for March from 34.5 in February. Average Hourly Earnings increased to 0.3% from 0.2% in February.

Total nonfarm payrolls increased by 236,000 for March. The February number was revised up to 326,000 from the previously reported 311,000.

Weekly Roundup

Two of the three most widely followed indexes ended the week in the red, ending a two-week winning streak. The Dow Jones Industrial Average advanced 0.6%, while the Nasdaq Composite and the S&P 500 lost 1.1% and 0.1%, respectively.

Last week was marked by mixed trading, dominated by recessionary fears on Wall Street and apprehensions about rising prices. Even as investors pondered about pricing in possible rate cuts by the Fed in the second half of the year, the OPEC+ cut oil production, thereby pushing up oil prices. Oil prices have a direct effect on the general inflation level in an economy and may deter the central bank from turning dovish about interest rates.

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