By Caitlin Ostroff and Julia Carpenter
U.S. stocks rebounded Thursday after jobless claims data showed that the labor market continued to recover, putting major indexes on track to snap a three-day losing streak.
Fresh data showed that 444,000 Americans applied for first-time unemployment benefits in the week ended May 15, down from 478,000 in the week prior. That is the lowest level since the pandemic hit in mid-March 2020.
Stocks and other risky assets had been under pressure this week following concerns that rising inflation and a speedy economic recovery could prompt central bankers to pare back easy-money policies.
"I think people are still concerned by the volatile moves that we're having in our market," said Jonathan Corpina, senior managing partner at Meridian Equity Partners. "In reality, people are still apprehensive about what the economy will look like one month from now, two months from now, six months from now."
The S&P 500 edged up 1.1%, while the Dow Jones Industrial Average gained 0.7%. The technology-heavy Nasdaq Composite added 1.6%. As of Wednesday's close, the S&P 500 and Dow were off less than 3% from the records they set two weeks ago, while the Nasdaq had dropped almost 6% from its late-April high.
"Traders and investors, at least at the margin, are coming in and taking advantage of this selloff," said Quincy Krosby, investment chief market strategist for Prudential Financial. "We'll see how enduring that is."
The technology and communication services sectors led the way in the S&P 500 on Thursday, both rising more than 1.5%. Stocks in those sectors have been particularly sensitive to worries about rising interest rates, in part because their earnings are expected to come further in the future. Rising yields increase the value of current earnings relative to future ones.
Markets are likely to be volatile until additional economic data provides a clearer picture, said Seema Shah, chief strategist at Principal Global Advisors. "I don't think we could know anything really about which way inflation is going to go until September, but the market is unable to wait that long."
Bitcoin rose 3.6% to $39,793 following a frenzied selloff Wednesday that saw cryptocurrencies plunge. Ether rose 5.7% to $2,763, and dogecoin gained 12% to trade near 40 cents.
"[Cryptocurrency] is no longer an asterisk for the general market," Ms. Krosby said. "It seems like it's becoming very much part of the general market, and questions whether or not the selloff in bitcoin is representative of concerns over risk-on risk-off over the larger market."
The continued retail struggle could signal a temporary change in consumer behavior as the vaccine rollout continues, Ms. Krosby said. Shares of Ralph Lauren dropped 8.2%, while Gap and L Brands each fell around 4%.
"I think you're seeing the consumer using their freedom: traveling, dining out, using their pent-up money," she said. "But I think when consumers go back to work, you'll see them wanting more clothing and new outfits and going to stores."
In bond markets, the yield on 10-year Treasury notes ticked down to 1.633%, from 1.680% Wednesday. Yields fall when bond prices rise.
Shares of Virgin Galactic Holdings rose 12% after the aerospace and space-travel company confirmed that the next test flight of its SpaceShipTwo Unity will be conducted Saturday, pending weather and technical checks.
Overseas, the pan-continental Stoxx Europe 600 ticked up 1.3%. The major Asian indexes closed on a mixed note. China's Shanghai Composite Index edged 0.1% lower, South Korea's Kospi fell 0.3% and Hong Kong's Hang Seng declined 0.5%. Japan's Nikkei 225 advanced 0.2%.
Write to Caitlin Ostroff at email@example.com and Julia Carpenter at Julia.Carpenter@wsj.com
(END) Dow Jones Newswires