U.S. stocks on Thursday were on the right track to finish a mostly positive session higher, with earnings news grabbing many of the highlight. Investors also parsed through mixed economic data.
Into the ultimate hour of trading, the Nasdaq Composite (COMP.IND) was up 1.38% to 11,469.43 points. Tesla (TSLA) boosted the tech-heavy index as shares of the electrical vehicle maker jumped greater than 9% after CEO Elon Musk estimated a 2023 production rate of around 2M cars.
“Ultimately, Tesla is firmly back on the road to growth and maintains an enviable market position,” Hargreaves Landsdown analyst Sophie Lund-Yates said. “Nevertheless, there are some clouds gathering on the horizon on each an economic and industry level. Each of those have the potential to noticeably squeeze margins.”
The benchmark S&P 500 (SP500) added 0.84% to 4,050.20 points. The Dow (DJI) was 0.45% higher to 33,894.17 points. Gains within the blue-chip index were capped by a retreat in shares of IBM (IBM) after the IT giant’s quarterly results upset.
All 11 S&P sectors were trading within the green, aside from Consumer Staples. Energy and Consumer Discretionary rose probably the most.
In the most important economic news of the day, the initial estimate for U.S. Q4 GDP growth got here in at +2.9%, stronger than the expected +2.7% figure. Nevertheless, GDP growth decelerated from Q3.
“In brief, the Q4 headlines flatter the underlying picture – inventories contributed 1.5p to growth, while foreign trade added 0.6pp; neither are sustainable sources of growth,” Pantheon Macroeconomics’ Ian Shepherdson said in a note.
“We predict final demand growth might be minimal in the subsequent couple quarters, with headline GDP falling. Whether this eventually is asserted a recession will depend upon what happens to employment and incomes, but they’re each more likely to soften markedly, at the very least. And note that the near-stalling in final demand doesn’t reflect the complete impact of the Fed’s tightening, so these data reinforce our view that further rate hikes are unnecessary,” Shepherdson added.
Moreover, December durable goods orders got here in at 5.6%, above the expected 2.5% level. The variety of Americans filing for weekly jobless claims fell by 6K to 186K, hitting a 9-month low and pointing to continued resilience within the labor market.
“We expected the drop in jobless claims – the consensus appeared to disregard quite strong seasonal patterns – and so they likely will remain near their current level for an additional couple weeks, before progressively beginning to creep higher. The surge in layoff announcements point unambiguously to much higher claims in Q2,” Shepherdson said.
Moreover, December recent home sales topped estimates at 2.3% M/M to 616K in comparison with the 614K forecasted number.
Turning to the bond markets, rates were higher. The ten-year Treasury yield (US10Y) rose 3 basis points to three.49%. The two-year yield (US2Y) rose 5 basis points to 4.18%.
Earnings news also continued to garner a bit of the highlight on Thursday. Maker of paints and coatings Sherwin Williams (SHW), maker of spices and seasoning McCormick (MKC) and Southwest Airlines (LUV) were among the many top percentage losers on the S&P 500 (SP500) after their results did not impress. Conversely, data storage company Seagate (STX) surged to the highest of the S&P after better-than-expected numbers.
Amongst other lively stocks, Tesla’s rally helped broader electric vehicle stocks.
Qualtrics (XM) surged greater than 25% after SAP said it’s exploring the sale of its remaining stake in the corporate.