Stocks were higher Thursday as investors took comfort in a dip in weekly jobless claims and looked past disappointing tech earnings and the mania surrounding heavily shorted names such as GameStop .
The Dow Jones Industrial Average gained 402 points, or 1.33%, to 30,705, the S&P 500 rose 1.19% and the Nasdaq rose 0.8%.
Jobless claims dropped more than expected last week and data showed the U.S. economy expanded in the fourth quarter at a 4% annualized rate.
Apple posted stronger-than-expected fiscal first-quarter earnings and quarterly revenue of more than $100 million for the first but the stock traded lower after the iPhone giant issued a cautious outlook.
Tesla tumbled Thursday after the electric vehicle company reported a sixth consecutive quarter of profit that, however, was well below Wall Street expectations. Operating margins also dropped to 5.4% in the fourth quarter.
Video: Investors should be concerned about earnings and rising bond yields, strategist says (CNBC)
Stocks fell Wednesday, posting their biggest drop since October, as shares of technology giants fell sharply and Federal Reserve Chairman Jerome Powell was cautious about the outlook for a U.S. economic recovery. The Dow fell 633 points, or 2.05%, the S&P 500 declined 2.57% and the Nasdaq slumped 2.61%.
“We think it’s going to be a struggle,” Powell said Wednesday. “The pandemic still provides considerable downside risks to the economy.”
The Fed announced Wednesday, as expected, that it was keeping interest rates near zero and maintaining its bond-buying program at the current pace of $120 billion a month amid signs an economic recovery “has moderated in recent months.”
“Going forward, we believe that the Fed needs to stay the course because we don’t have the macro environment for the market to sustain itself,” said David W. Wagner, portfolio manager and analyst at Aptus Capital Advisors. “The market is still using crutches as it’s not fully healed – that’s apparent given that there are so many Americans worse off relative to where they were last year. There are 9 million Americans still unemployed – more than what we saw during the financial crisis.”
Investor anxiety has been heightened by the mania gripping heavily shorted shares, such as GameStop, which has soared dramatically this week as retail traders bid up the stock and big Wall Street firms bailed.
“While I don’t think the surge in GameStop shares is a signal of euphoria in the broader stock market, the illumination of this reckless and unethical trading environment may be the catalyst behind a near-term stock market correction,” said David Trainer, CEO of investment research firm New Constructs.
This article was originally published by TheStreet.