Wall Street rose on Thursday, moving toward the finish of its best week in nearly two months, as a retreat in bond yields lifted investor sentiment. The S&P 500 gained 0.6% in afternoon trading, while the Dow Jones Industrial Average added 200 points, or 0.5%, and the Nasdaq composite climbed 0.8%.
Bond Yields Ease, Fueling Rally
The yield on the 10-year Treasury note fell to 4.28% from 4.33% late Wednesday, providing relief to stocks that had been pressured by rising rates. The drop in yields came after weaker-than-expected economic data, including a report showing U.S. factory activity contracted for a third straight month in June, according to the Institute for Supply Management. “The bond market is finally giving stocks a break,” said Sam Stovall, chief investment strategist at CFRA Research. “Investors are interpreting the soft economic data as a sign that the Federal Reserve may not need to hike rates further.”
Market Breadth Improves
Gains were broad-based, with technology, financial, and industrial sectors all posting increases. Apple rose 1.2%, Microsoft added 0.9%, and JPMorgan Chase climbed 1.1%. The rally brought the S&P 500’s weekly gain to about 2.5%, putting it on track for its best weekly performance since early May. The Dow is up 2.1% for the week, while the Nasdaq has risen 3%.
Economic Data and Fed Expectations
Data released Thursday showed that U.S. jobless claims rose slightly to 238,000 last week, still near historically low levels, while continuing claims edged up to 1.82 million. The mixed labor market data reinforced expectations that the Fed will hold interest rates steady at its next meeting in July. According to CME Group’s FedWatch tool, traders see a 91% probability of no rate change. “The market is pricing in a benign scenario where the economy slows just enough to keep inflation in check but not enough to tip into recession,” said Quincy Krosby, chief global strategist at LPL Financial.
Global Markets and Commodities
Overseas, European stocks advanced, with Germany’s DAX rising 0.7% and France’s CAC 40 gaining 0.5%. Asian markets were mixed: Japan’s Nikkei 225 slipped 0.1%, while Hong Kong’s Hang Seng index added 0.3%. In commodities, benchmark U.S. crude oil fell 0.8% to $83.25 per barrel, while gold edged up 0.2% to $2,360 per ounce.
