In trading on Thursday, stocks lost some ground following an early surge, but rallied towards the end of the day to close generally higher. The Dow and the S&P 500 hit new record closing peaks, and the Nasdaq recorded its best close in over two years.
The Dow finished just below its high for the day, up 242.74 points, or 0.6%, at 38,049.13. The S&P 500 also advanced, gaining 25.61 points or 0.5% to end at 4,894.16. Meanwhile, the Nasdaq, heavy with tech stocks, crept up by 28.58 points or 0.2% to 15,510.50.
Early Wall Street gains were spurred by the release of a Commerce Department report which showed stronger than anticipated US economic growth for Q4 2023. The report revealed that gross domestic product (GDP) increased by 3.3%, despite predictions of a 2.0% rise. This increase, following a 4.9% rise in Q3, reflects a continued surge in consumer spending which rose by 2.8% in Q4 following a 3.1% hike in Q3.
Alongside this, inflation saw a slowdown, with the personal consumption expenditures price index up by 1.7% in Q4, compared to a 2.6% increase in Q3.
Jamie Cox, Managing Partner for Harris Financial Group, noted, "The headline data are the perfect mix of strong consumption and dropping inflation. This is exactly what you want to see if you are running the Federal Reserve and want to move rates lower this year."
In other news, a Commerce Department report highlighted that new orders for US manufactured durable goods remained unchanged in December. Durable goods orders saw no change in December after seeing a significant 5.5% rise in November.
The Labor Department also released a report indicating that first-time claims for US unemployment benefits rose more than expected in the week ending January 20th. Initial jobless claims increased to 214,000, up 25,000 from the previous week.
As the trading day progressed, buying interest dwindled as traders turned their attention to Friday's anticipated report on personal income and spending. This report, which includes the Federal Reserve's preferred inflation readings, could significantly impact interest outlooks.
IBM Corp. stood out among individual stocks, soaring by 9.5% after reporting Q4 results that outperformed analyst estimates.
Sector News
Airline stocks demonstrated significant strength, with the NYSE Arca Airline Index surging by 3.4%. A noticeable increase in crude oil prices also boosted oil stocks, reflected by a 2.3% jump in the NYSE Arca Oil Index.
Telecom stocks bounced back robustly after Wednesday's steep drop, propelling the NYSE Arca North American Telecom Index up by 1.8%. Housing and utilities, both interest-rate sensitive sectors, also saw notable increases. In addition, gold, natural gas and commercial real estate stocks experienced gains.
Other Markets
Internationally, the majority of the Asia-Pacific stock markets saw gains on Thursday. Japan's Nikkei 225 Index closed slightly above the unchanged line, while Hong Kong's Hang Seng Index surged by 2.0% and China's Shanghai Composite Index leapt by 3.0%.
Major European markets also posted modest gains after the ECB decided to keep interest rates unchanged. The FTSE 100 Index in the UK closed just above its starting position, while Germany's DAX Index and France's CAC 40 Index each edged up by 0.1%.
In the bond market, US treasuries made steady gains following the release of US economic data. Consequently, the yield on the benchmark ten-year note, which moves inversely to its price, dropped 4.6 basis points to 4.132 percent.Title: Looking Ahead
In the upcoming days, a significant focus will likely be on the figures related to consumer price inflation, as included in the Commerce Department's personal income and spending report. This report is set to be released this Friday.
Additionally, market activity may also be influenced by responses to the latest earnings announcement from semiconductor powerhouse, Intel (INTC). The company is expected to present its fourth-quarter results, following the conclusion of trading today.
