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Markets

Tech stocks lift Wall Street even as economic rebound slows

  • Weekly jobless claims unexpectedly rise to 870,000.
  • US new-home sales vault to near 14-year high.
  • Nikola slides after Wedbush downgrade.
  • Accenture drops, BlackBerry rises on quarterly earnings.
Published September 25, 2020

Wall Street rallied in a rocky session on Thursday as beaten-down technology shares gained favor after data showing a surge in the sale of new homes revived faith in the economic recovery even as US jobless claims rose unexpectedly.

Apple Inc, Amazon.com Inc, Nvidia Corp and Facebook Inc, stocks that have outperformed at a time of increased economic uncertainty, all rose.

"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 shares have weighed on investors sentiment this month.

Wall Street started the day lower after the jobless claims data, with the S&P 500 briefly falling 10% below the intraday record peak it hit Sept. 2 for the second time in recent days.

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.

Homebuilders climbed as sales of new single-family homes rose to their highest level in nearly 14 years in August. The Commerce Department report follows data this week showing sales of previously owned homes also near a 14-year high.

Unofficially, the Dow Jones Industrial Average rose 51.65 points, or 0.19%, to 26,814.78, the S&P 500 gained 9.6 points, or 0.30%, to 3,246.52, and the Nasdaq Composite added 39.28 points, or 0.37%, to 10,672.27.

The CBOE volatility index, known as Wall Street's fear gauge and 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."

Nikola Corp, which is set for its biggest weekly decline ever, slid sharply as Wedbush downgraded the stock to "underperform."

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

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