U.S. Stocks Regaining Ground Following Yesterday’s Sell-Off

Stocks have shown a strong move to the upside in morning trading on Thursday, regaining ground following the sell-off seen in the previous session. The major averages have all climbed firmly into positive territory but remain well off their recent highs.

Currently, the major averages are hovering near their best levels of the day. The Dow is up 506.67 points or 1.7 percent at 30,809.84, the Nasdaq is up 145.45 points or 1.1 percent at 13,416.05 and the S&P 500 is up 57.93 points or 1.5 percent at 3,808.70.

The rebound on Wall Street comes as traders look to pick up stocks at somewhat reduced levels following the steep drop seen on Wednesday.

The Dow and the S&P 500 saw their biggest one-day declines since October in the previous session, reflecting concerns about new coronavirus strains, uncertainty about a new stimulus bill and worries about highly speculative trading.

Buying interest may also have been generated by a report from the Labor Department showing a bigger than expected decline in first-time claims for U.S. unemployment benefits in the week ended January 23rd.

The Labor Department said initial jobless claims fell to 847,000, a decrease of 67,000 from the previous week’s revised level of 914,000.

Economists had expected jobless claims to drop to 875,000 from the 900,000 originally reported for the previous week.

Jobless claims declined for the second consecutive week after reaching a more than four-month high of 927,000 in the week ended January 9th.

The Commerce Department also released a report showing economic growth matched economist estimates in the fourth quarter of 2020.

The report said real gross domestic product jumped by 4.0 percent in the fourth quarter after skyrocketing by 33.4 percent in the third quarter.

Despite the rebound in the second half of the year, GDP for 2020 contracted by 3.5 percent following the 2.2 percent growth seen in 2019.

A separate report from the Commerce Department showed new home sales in the U.S. rebounded in the month of December after falling for four consecutive months.

Meanwhile, notable declines by shares of Apple (AAPL) and Tesla (TSLA) have limited the upside for the markets.

Apple is down by 1.5 percent after the tech giant reported better than expected fiscal first quarter results but provided cautious guidance.

Electric car maker Tesla is slumping by 3.1 percent after reporting fourth quarter earnings that missed analyst estimates.

Gold stocks are showing a substantial rebound after falling sharply in the previous session, with the NYSE Arca Gold Bugs Index spiking by 4.8 percent after ending Wednesday’s trading at its lowest closing level in seven months.

The rebound by gold stocks comes as the price of gold for February delivery is climbing $16.60 to $1,861.50 after closing lower for five straight sessions.

Significant strength has also emerged among airline stocks, resulting in a 4.2 percent jump by the NYSE Arca Airline Index.

American Airlines (AAL) is leading the sector higher after reporting a narrower than expected fourth quarter loss on revenues that exceeded expectations.

Software, banking and healthcare stocks are also seeing considerable strength, rebounding along with most of the other major sectors following the broad based sell-off on Wednesday.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 1.5 percent, while Hong Kong’s Hang Seng Index plummeted by 2.6 percent.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.’s FTSE 100 Index is down by 0.6 percent, the German DAX Index is up by 0.2 percent and the French CAC 40 Index is up by 1 percent.

In the bond market, treasuries are giving back ground after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.8 basis points at 1.042 percent.