NEW YORK: Wall Street bounced back on Thursday, after a selloff in the previous session as the US Federal Reserve dashed hopes for early interest rate cuts, with focus moving to Big Tech earnings due later in the day.
The S&P 500 and the Nasdaq on Wednesday notched their biggest one-day percentage declines since September and October, respectively, after the Fed reminded markets of its undeterred focus on battling inflation, smashing speculations of policy easing kicking off in March.
Consumer staples shares led gains with a 1.6% rise among the 11 major S&P 500 sectors, boosted by a 3.3% jump in Altria Group after the tobacco giant posted a fourth-quarter profit beat and authorized a new share buyback plan.
Communication services shares gained 1.1%, while the financial sector was the only one in the red and down 0.4%.
A selloff in shares of US regional banks continued on Thursday, with New York Community Bancorp down 10.7%. The KBW Regional Banking index fell 3.7%, on track for its steepest two-day decline since March last year.
On the data front, weekly jobless claims rose to a seasonally adjusted 224,000, higher than the expected 212,000, while a report showed job cut announcements in January rose to a 10-month high.
Separately, US manufacturing stabilized in January amid a rebound in new orders, but inflation at the factory gate picked up.
“The Fed needed more time to explore incoming data and they didn’t feel the need to be in a hurry to cut. I was never expecting March,” said Todd Morgan, chairman of Bel Air Investment Advisors.
Focus moves back to Big Tech earnings that would shed light on whether megacap stocks can sustain their recent rally, fueled by the hype around artificial intelligence and hopes of early rate cuts.
Apple’s iPhone sales are expected to have seen the best growth in five quarters, but analysts see a tough year for the company in China, while investors will monitor whether Amazon.com can cash in on its delivery heft by boosting fee revenue from its “Buy With Prime” service.
Meta Platforms is likely to see a muted impact from generative AI on its advertising business.
The three tech giants, up between 0.9% and 1.6%, will report earnings after the closing bell, a day after investors punished Alphabet and Microsoft on mounting costs of developing generative AI-powered products.
At 12:10 p.m. ET, the Dow Jones Industrial Average was up 225.17 points, or 0.59%, at 38,375.47, the S&P 500 was up 40.29 points, or 0.83%, at 4,885.94, and the Nasdaq Composite was up 137.74 points, or 0.91%, at 15,301.75.
Merck climbed 3.5% following the drug maker’s upbeat fourth-quarter results, while Dow component Honeywell dropped 3.1% after the diversified industrial firm forecast a weak first-quarter profit.
Qualcomm fell 3.9% on concerns over Android sales in China.
Advancing issues outnumbered decliners for a 2.32-to-1 ratio on the NYSE and a 1.46-to-1 ratio on the Nasdaq.
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