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Markets

Tech stocks lift Wall Street as economic rebound slows

  • Weekly jobless claims unexpectedly rise to 870,000.
  • Nikola slides after Wedbush downgrade.
  • Accenture drops, BlackBerry rises on quarterly earnings.
  • Indexes up: Dow 0.39%, S&P 0.54%, Nasdaq 0.81%.
Published September 24, 2020

Wall Street climbed in choppy trading on Thursday, with investors returning to the perceived safety of technology-related stocks as a surprise rise in weekly jobless claims signaled a slowdown in economic growth.

Nine of the 11 major S&P indexes were trading higher, with information technology leading gains.

Apple Inc, Amazon.com Inc, Netflix Inc , Nvidia Corp and Facebook Inc, which have outperformed at a time of increased economic uncertainty, rose between 0.5% and 2.7%.

"Investors are going to be needing stocks that can weather a lower growth path because if we don't get another round of fiscal stimulus, there's not going to be a lot more we can do to continue boosting the economic recovery," said Max Gokhman, capital markets strategist at Pacific Life Fund Advisors.

Waning hopes of more fiscal stimulus, signs of a faltering business recovery and a sell-off in technology-related names have weighed on US stocks this month.

The S&P 500 briefly fell 10% below its intraday record high hit on Sept. 2. If the benchmark index closes at that level, it will enter correction territory.

Dow constituents, considered a barometer of economic confidence, lagged the S&P 500 on Thursday as data showed 870,000 Americans applied for jobless benefits in the week ended Sept. 19, up from 866,000 in the previous week.

Job cuts have spread to industries such as financial services and technology that were not initially impacted by the mandated business closures in mid-March because of insufficient demand.

At 12:32 p.m. ET, the Dow Jones Industrial Average was up 0.39%, the S&P 500 was up 0.54% and the Nasdaq Composite was up 0.81%.

The CBOE volatility index, which is hovering near two-week highs, is expected to climb in the run up to the quarter end next week.

"The key is the VIX index, which has not yet reached levels that would suggest a continued strong move to the downside," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"So you might get a day of bargain hunting followed by a day of selling, but as the last days of September come into place, we should begin to see some sort of window dressing by institutions."

Homebuilders climbed 0.8% as sales of new single-family homes increased to their highest level in nearly 14 years last month.

Nikola Corp, which is set for its biggest weekly decline ever, shed another 4.3% as Wedbush downgraded the stock to "underperform".

Accenture Plc fell 6.4% after the IT consulting firm forecast current-quarter revenue below expectations, while, US-listed shares of Canadian security software firm BlackBerry Ltd jumped 5% after it posted a surprise rise in quarterly revenue.

Declining issues nearly matched advancers on the NYSE and the Nasdaq.

The S&P index recorded no new 52-week highs and two new lows, while the Nasdaq recorded seven new highs and 116 new lows.

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