Dow Closes Nearly Flat But Nasdaq, S&P 500 Reach New Record Closing Highs

After showing a lack of direction over the two previous sessions, stocks turned in another relatively lackluster performance during trading on Thursday. Despite the choppy trading, the Nasdaq and the S&P 500 reached new record closing highs.

The Dow edged down 7.10 points or less than a tenth of a percent to 31,430.70, while the broader Nasdaq and S&P 500 closed in positive territory. The Nasdaq climbed 53.24 points or 0.4 percent to 14,025.77 and the S&P 500 rose 6.50 points or 0.2 percent to 3,916.38.

The chopping trading on Wall Street came as buying interest was somewhat subdued following recent strength, but traders also largely refrained from cashing in on the recent gains amid concerns about missing out on further upside.

Optimism about additional stimulus continued to support the markets along with largely upbeat earnings news, a slowdown in the rate of coronavirus infections and accelerated vaccine rollouts.

Nonetheless, traders have recently seemed somewhat reluctant to make substantial moves amid concerns the markets are becoming overbought.

Traders were also digesting a report from the Labor Department showing jobless claims decreased from an upwardly revised level but came in above estimates.

The Labor Department said initial jobless claims edged down to 793,000 in the week ended February 6th, a decrease of 19,000 from the previous week’s revised level of 812,000.

Economists had expected jobless claims to drop to 757,000 from the 779,000 originally reported for the previous week.

“Additional fiscal stimulus and broader vaccine diffusion will eventually allow the labor market to heal,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She continued, “But as the January employment data showed, current conditions are still quite weak and declines in new jobless claims are likely to occur only gradually in the near term.”

Last Friday, the Labor Department released a separate report showing a modest rebound in U.S. employment in the month of January.

Traders have recently looked for the silver lining in most major economic data, seeing upbeat data as positive for the economy and seeing weaker than expected data as putting pressure on lawmakers to pass more stimulus.

Sector News

Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 3.5 percent to a new record closing high.

Considerable strength was also visible among computer hardware stocks, as reflected by the 1.9 percent jump by the NYSE Arca Computer Hardware Index. The index also reached a new record closing high.

On the other hand, oil service stocks saw substantial weakness amid a pullback by the price of crude oil. Crude for May delivery fell $0.44 to $58.24 a barrel after closing higher for eight straight sessions.

Reflecting the weakness in the oil service sector, the Philadelphia Oil Service Index tumbled by 2.9 percent on the day.

Gold stocks also showed a significant move to the downside along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday, with several major markets closed for holidays. Hong Kong’s Hang Seng Index rose b0.5 percent, while Australia’s S&P/ASX 200 Index slipped by 0.1 percent.

Meanwhile, European stocks moved mostly higher on the day, with the pan-European STOXX 600 Index rising by 0.5 percent. While the German DAX Index also advanced by 0.8 percent, the U.K.’s FTSE 100 Index inched up by 0.1 percent and the French CAC 40 Index closed marginally lower.

In the bond market, treasuries moved back to the downside after turning higher over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, rose by 2.5 basis points to 1.158 percent.

Looking Ahead

Earnings news may attract attention on Friday, with entertainment giant Disney (DIS) among the companies releasing their quarterly results after the close of today’s trading.

The University of Michigan’s preliminary report on consumer sentiment in February may also attraction, although trading activity is likely to remain subdued ahead of the long weekend.

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