U.S. Stocks Seeing Further Upside After Early Rally

After moving sharply higher early in the session, stocks continue to see significant strength in mid-day trading on Thursday. With the rally on the day, the major averages are partly offsetting the steep losses posted in the previous session.

The major averages have seen further upside in recent trading, reaching new highs for the session. The Dow is up 617.45 points or 2 percent at 30,920.62, the Nasdaq is up 182.74 points or 1.4 percent at 13,453.33 and the S&P 500 is up 73.44 points or 2 percent at 3,824.21.

The rebound on Wall Street comes as traders look to pick up stocks at somewhat reduced levels following the sell-off 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.

While all those issues remain, traders seem unfazed by analyst warnings that the markets could be headed for a sharply pullback.

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.

Despite the advance by the broader markets, shares of Apple (AAPL) and Tesla (TSLA) have shown notable moves to the downside on the day.

Apple is down by 2.2 percent after the tech giant reported better than expected fiscal first quarter results but provided cautious guidance.

Electric car maker Tesla is slumping by 2.8 percent after reporting fourth quarter earnings that missed analyst estimates.

Sector News

Airline stocks continue to see substantial strength in mid-day trading, with the NYSE Arca Airline Index soaring by 4.1 percent.

American Airlines (AAL) has pulled back well off its highs but continues to post a strong gain after reporting a narrower than expected fourth quarter loss on revenues that exceeded expectations.

Significant strength is also visible among software stocks, as reflected by the 3.3 percent spike by the Dow Jones U.S. Software Index. The index has reached a record intraday high.

Gold stocks also continue to turn in a strong performance on the day, driving the NYSE Arca Gold Bugs Index up by 3.2 percent. The strength in the sector comes amid a modest increase by the price of gold.

Utilities, banking and semiconductor stocks are also seeing considerable strength in mid-day trading, while telecom and computer hardware stocks are bucking the uptrend.

Other Markets

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

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index slid by 0.6 percent, the German DAX Index rose by 0.3 percent and the French CAC 40 Index advanced by 0.9 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 4.1 basis points at 1.055 percent.

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