Wall Street ended sharply higher at the close of a broad rally on Thursday, bouncing back from three straight days of selling on upbeat labour market data.
All three major United States stock indexes notched solid gains, with the Nasdaq, weighed by Tesla Inc, picking up the rear. Meanwhile, cyclical shares enjoyed the biggest gains.
The Dow Jones Industrial Average rose 433.79 points, or 1.29 percent, to 34,021.45; the S&P 500 gained 49.46 points, or 1.22 percent, to 4,112.5; and the Nasdaq Composite Index added 93.31 points, or 0.72 percent, to close at 13,124.99.
Recent economic data has prompted inflation fears as scarcity of both materials and workers threatens to send prices surging in the face of a demand boom.
“If this is a footrace, supply chains are still tying their shoes,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York City. “But they will catch up with demand fairly quickly.”
But on Thursday, investors appeared to be focusing on the glass-half-full side of the demand/supply equation.
This was evidenced by the outperformance of small caps, chips and transports, economically sensitive stocks that stand to gain as the US emerges from the coronavirus pandemic recession.
“Sectors and stocks that were hurt most significantly by yesterday’s selloff rebounded strongly today given that economic growth is expected to remain strong throughout the year and any inflation is likely to be temporary,” Carter added.
New applications for unemployment insurance continue to fall, according to jobless claims data from the US Department of Labor (DOL) that hit a 14-month low.
DOL data also showed producer prices swelled last month, building on the inflation surge narrative of Wednesday’s consumer prices report.
“The inflation boogeyman is back right on cue,” Carter said. “And will continue to spook markets for the coming months.”
But rising prices were widely anticipated, and the US Federal Reserve has provided repeated assurances that it does not foresee those spikes morphing into sustained, long-term inflation.
Energy stocks lost ground, weighed by a drop in crude prices.
Dating app owner Bumble Inc tumbled below its initial public offering price, as investors remained cautious about how quickly users will return to in-person meetings.
Shares of Walt Disney Co oscillated throughout the session ahead of the company’s quarterly results, expected after the closing bell.
Boeing Co advanced after gaining approval from US regulators for a fix of an electrical grounding issue.
Tesla continued its slide after boss Elon Musk doubled down on his sudden rejection of cryptocurrency Bitcoin.