U.S. stocks were mostly higher Thursday, with the Nasdaq leading the way after upbeat results from Taiwan Semiconductor Manufacturing Company lifted chip makers.
What’s happening
-
The Dow Jones Industrial Average
DJIA
fell 102 points, or 0.3%, to 37,164. -
The S&P 500
SPX
was up 17 points, or 0.4%, at 4,756. -
The Nasdaq Composite
COMP
gained 154 points, or 1%, to 15,008.
On Wednesday, the Dow fell 94 points, or 0.3%, the S&P 500 and Nasdaq Composite each shed 0.6%.
What’s driving markets
The S&P 500 has endured a choppy start to the year, pulling back from near-record highs as investors pared expectations of interest rate cuts in coming months, forcing implied borrowing costs higher in the process.
The 10-year Treasury yield
BX:TMUBMUSD10Y
by midweek had jumped more than 30 basis points from its December 27 low of 3.8%, after central bank officials pushed back against bets on interest rates cuts, and with its latest surge coming in response to stronger-than-expected U.S. retail sales data on Tuesday.
“The recent very strong correlation between bonds and equities that started bearishly for both in August around the QRA (quarterly refunding announcement) and flipped bullish in October around the QRA, has flipped bearish again in 2024,” said Jim Reid, strategist at Deutsche Bank.
“History tells us the tight correlation won’t last forever, and one will break out from the other, but for now the relationship is lockstep and yesterday was another day where both sold off as investors dialed back the prospect of near-term rate cuts,” Reid added.
Treasury yields popped higher after data showed the number of Americans who applied for first-time unemployment benefits last week fell to 187,000 to the lowest in 16 months, showing that layoffs remain near record lows. Economists had forecast new claims in the week ending Jan. 13 to total 208,000.
Also helping U.S. futures stabilize on Thursday was a better performance from Asian trading.
Concerns about the health of China’s economy saw Hong Kong’s Hang Seng
HK:HSI
on Wednesday plunge 3.7% to its lowest since October 2022, but the new session saw the index rally 0.75%, with the mainland’s Shanghai Composite
CN:SHCOMP
also recovering some poise with a 0.4% gain.
Further good news came from Taiwan Semiconductor Manufacturing Company
2330,
TSM,
which produced results that beat analysts forecasts. U.S.-listed shares
TSM,
jumped more than 7%, while fellow chip makers Advanced Micro Devices
AMD,
up 3.2%, and Nvida Corp.
NVDA,
also rallied.
In other data, the Philadelphia Fed said its gauge of regional business activity inched up to negative 10.6 in January from negative 12.8 in the prior month. Any reading below zero indicates deteriorating conditions.
Housing starts fell to 1.46 million annual pace from 1.53 million in November, the government said Thursday. Economists had expected a rate of 1.43 million.
Companies in focus
-
BofA Securities analyst Wamsi Mohan weighed in with a newly upbeat view of Apple Inc. stock
AAPL,
+2.21%
Thursday, upgrading it to buy from neutral amid longer-term optimism about the iPhone business. Shares rose 2.2%.
