S&P500 and Nasdaq 100: Stocks Soar as Job Data Eases Economic Slowdown Fears

Wall Street Soars on Job Data Boost

Wall Street’s main indexes opened higher on Thursday, buoyed by better-than-expected jobs data that eased concerns of an imminent economic slowdown in the U.S. economy. The number of Americans filing new applications for unemployment benefits fell more than anticipated last week, suggesting the labor market remains robust despite previous fears.

At 14:38 GMT, the Dow Jones is trading 39311.53, up 548.08 or +1.41%. The S&P 500 Index is at 5296.44, up 96.94 or +1.86% and the Nasdaq is trading 16559.79, up 357.98 or +2.21%.

Economic Strength Reassures Investors

Most megacap and growth stocks advanced, recovering from Monday’s sharp decline triggered by disappointing jobs data. “Since the jobs report on Friday, everyone’s been nervous about a recession … The claims came in lower than expected, alleviating some of the fear that the labor market was completely rolling over,” said Thomas Hayes, chairman at Great Hill Capital LLC. J.P.Morgan increased the odds of a U.S. recession by the end of this year to 35% from 25%, citing easing labor market pressures.

Yields Drop as Confidence Returns

The 10-year Treasury yield fell back below 4% following the jobless claims data, a level seen before last Friday’s disappointing jobs report. This movement in yields provided additional support to the equity markets.

Earnings Drive Stock Surges

On the earnings front, Eli Lilly jumped 10.5% after raising its annual profit forecast, driven by strong sales of its weight-loss drug Zepbound. Under Armour surged 15.8% after reporting a surprise first-quarter profit, benefiting from inventory and promotional efforts. Conversely, Bumble’s shares dropped 36% after the dating app operator slashed its annual revenue growth forecast, raising concerns about its growth plans. Warner Bros Discovery fell 7.9% following a write-down of its TV assets, while Monster Beverage lost 12.9% due to disappointing second-quarter sales.

Sector Gains Lead the Rally

Nine of the 11 major S&P sectors were trading higher, led by gains in information technology and health care. Advancing issues outnumbered decliners by a 3.43-to-1 ratio on the NYSE and by a 2.64-to-1 ratio on the Nasdaq. The S&P 500 posted no new 52-week highs and two new lows, while the Nasdaq Composite recorded seven new highs and 52 new lows.

Expert Insights: Volatility Ahead

Joseph Ferrara, investment strategist at Gateway Investment Advisers, warned that the recent market volatility could persist throughout the year. “Economic concerns, geopolitical conflict, and the looming November elections could keep investors on edge in the coming months,” Ferrara said. He advised investors to prepare for elevated levels of volatility rather than adopt a purely defensive stance. “The consumer is going to be driving a lot of headlines between now and the end of the year,” Ferrara added.

Market Forecast: Cautious Optimism

Based on the latest data and analyst opinions, the market outlook remains cautiously optimistic in the short term. While economic concerns persist, the strong labor market data and positive earnings reports from key companies provide a bullish undertone. Traders should stay alert for further volatility but can expect a moderate upward trend as the market digests the latest economic indicators and corporate earnings.

Technical Analysis

E-mini S&P 500 Index futures turned around on Thursday after a surprisingly better initial claims report. The benchmark is currently straddling the week’s mid-point at 5239.63. Trader reaction to this level should set the tone today.

A sustained move over 5239.63 will indicate the presence of buyers. If this creates enough upside momentum we could see a near-term surge into the major pivot at 5360.50. This price level is the gateway to the 50-day moving average at 5500.53.

The inablity to hold 5239.63 will be a sign of weakness. This could fuel a break into the 200-day moving average at 5150.19, followed by this week’s low at 5120.00. Both levels are critical to the long-term trend.