Major U.S. stock indexes moved sharply higher Thursday morning after weekly jobless claims data helped ease concerns about the health of the U.S. economy that have hurt investor sentiment recently.
The S&P 500 and Nasdaq Composite were up 1.8% and 2.2%, respectively, while the Dow Jones Industrial Average gained 1.5%, a more than 500-point gain. The indexes, which closed lower on Wednesday following an afternoon downturn, have been on a rollercoaster ride over the past week amid the economic concerns and big moves for technology stocks.
The number of people filing for unemployment insurance benefits last week came in lower than economists had expected, which helped offset fears that were sparked by last Friday’s July jobs report. Last week’s data showed that the unemployment rate unexpectedly rose to 4.3%, leading market participants to bet that the Federal Reserve would have to cut interest rates swiftly and deeply.
The yield on the 10-year Treasury, which had fallen to below 3.7% on Monday, was near 4% after the claims numbers, not far from where it started the week.
Eli Lilly (LLY) was among the big stock movers Thursday morning, gaining 8%, after the pharmaceutical giant reported better-than-expected quarterly results and boosted guidance on the strength of sales for its weight-loss drugs Mounjaro and Zepbound.
Among large-cap tech stocks, AI investor darling Nvidia (NVDA) was up more than 3%, while Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Meta Platforms (META) were also solidly higher. Chip stocks, which have swung wildly recently, were sharply higher, with the iShares Semiconductor ETF up more than 4%.
Gold futures and crude oil futures were both up about 1%, while bitcoin jumped to its highest level of the week around $59,000.
Expectations for Big Fed Rate Cuts Moderate
7 minutes ago
The market meltdown on Monday that sent U.S. stock indexes to their biggest one-day losses in two years also led market participants to price in nearly a 100% chance that the Fed would cut its benchmark lending rate by half a percentage point at its next policy committee meeting in September.
With Thursday’s jobless claims data indicating that the economic fears that sparked Monday’s selloff may have been overblown, expectations for steep rate cuts in September and beyond are being scaled back.
Traders are now pricing in a 55% likelihood that the Fed will cut its influential rate by half a point at its September policy meeting, according to the CME Group’s FedWatch tool, which forecasts interest rate movements based on fed funds futures trading data. That’s still up from the 22% a week ago, but down from the 99% chance that was being priced in at the height of Monday’s volatility.
The Fed’s policy committee decided last week to maintain the fed funds rate at a range of 5.25% to 5.50%, where it has been for the past year as the central bank has sought to tame inflation. With inflation on the decline and stress in the labor market, Fed Chair Jerome Powell said last week that the Fed could start cutting rates, which are at their highest level since 2001, as soon as September.
Warner Bros. Discovery Shares Plunge on Weak Earnings
49 minutes ago
Warner Bros. Discovery (WBD) shares plunged Thursday after the entertainment company recorded an almost $10 billion second-quarter loss, hit by a write-down in the value of its cable networks.
The company posted a $9.1 billion non-cash goodwill impairment charge from its cable networks segment, showing that CNN and TNT, among others, continue to be disrupted by streaming services like Netflix (NFLX).
The company’s fortunes don’t look much brighter, either, after its TNT Sports unit last month lost out on the lucrative 11-year media rights deal to show NBA games.
Warner Bros. Discovery’s second-quarter loss widened to $9.99 billion from $1.24 billion last year, while revenue fell to $9.71 billion from $10.36 billion. The numbers were worse than expected on both the top and bottom lines.
WBD shares were down 10%, trading at their lowest levels since 2008.
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Eli Lilly Soars on Strength of Weight-Loss Drug Sales
1 hr 18 min ago
Eli Lilly (LLY) shares surged higher in early trading Thursday after the drugmaker’s second-quarter earnings came in well above analysts’ estimates and it raised its full-year revenue and profit guidance.
The maker of weight-loss drugs Mounjaro and Zepbound reported $11.3 billion in revenue, a 36% year-over-year jump and more than $1 billion above what analysts had expected. Profits rose 68% to $2.97 billion, also well above estimates.
Sales of Mounjaro more than tripled to $3.09 billion, while Zepbound sales have already surpassed $1 billion after only receiving FDA approval in November 2023.
Eli Lilly lifted its 2024 revenue guidance by $3 billion, now projecting $45.4 billion to $46.6 billion on the back of strong Mounjaro and Zepbound sales.
Eli Lilly shares were up nearly 9% in recent trading.
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Stock Futures Point to Higher Open for Major indexes
2 hr 25 min ago
Futures tied to the Dow Jones Industrial Average were up 0.5%.
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S&P 500 futures were up 0.8%.
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Nasdaq 100 futures were up 1.2%
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