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Wall Street closes up on tech rally despite mixed signs on economic rebound

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09/24/2020 | 10:43pm EDT
FILE PHOTO: A worker cleans the floor of the New York Stock Exchange (NYSE)

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 U.S. jobless claims rose unexpectedly.

Stocks also reacted positively to news of efforts to enact further stimulus in Washington, helping lift the S&P to a session high, although the index then turned negative before retracing some gains.

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

The wild session indicated caution was in store, said Dennis Dick, a trader at Bright Trading LLC, who warned market sentiment that drove momentum has sharply changed.

"Fear of missing out has turned into to fear of losing actual money," Dick said. "This is a shakeout of all the Robinhood traders, a shakeout of retail investors. They're getting punished, and rightfully so, because you can't just buy stocks out of a hat thinking stocks only go up."

Democrats in the U.S. House of Representatives are working on a $2.2 trillion coronavirus stimulus package that could be voted on next week, a key lawmaker said, as House Speaker Nancy Pelosi reiterated she is ready to negotiate with the White House.

Wall Street started the day lower after the jobless claims data. The S&P 500 briefly fell 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 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 rose 0.73% after the Commerce Department reported that sales of new single-family homes rose to their highest level in nearly 14 years in August. That report followed data this week showing sales of previously owned homes also near a 14-year high.

Phil Orlando, chief equity strategist at Federated Hermes, said notwithstanding spats of poor data, the U.S. economy is on a path to a powerful V-shaped recovery as seen in auto sales, the housing market and overall consumer spending.

"All of the inventory rebuilding is starting, all of the things you want to see are happening," Orlando said. "Now, are there some chinks in the armor? Yes, just saw it in the claims numbers this morning."

The Dow Jones Industrial Average closed up 52.31 points, or 0.20%, to 26,815.44. The S&P 500 gained 9.67 points, or 0.30%, to 3,246.59, and the Nasdaq Composite added 39.28 points, or 0.37%, to 10,672.27.

Volume on U.S. exchanges was 10.43 billion shares, up from 10.04 billion shares on Wednesday.

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 9.69% as Wedbush downgraded the stock to "underperform."

Accenture Plc fell 7.04% after the IT consulting firm forecast current-quarter revenue below expectations, while U.S.-listed shares of BlackBerry Ltd initially jumped after the Canadian security software firm posted a surprise rise in quarterly revenue, but finished the day lower.

Declining issues outnumbered advancing ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.36-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and two new lows; the Nasdaq Composite recorded 12 new highs and 129 new lows.

By Herbert Lash

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM, INC. 0.88% 3204.4 Delayed Quote.73.41%
APPLE INC. -0.61% 115.04 Delayed Quote.56.70%
DJ INDUSTRIAL -0.10% 28335.57 Delayed Quote.-0.71%
NASDAQ 100 0.25% 11692.571891 Delayed Quote.33.89%
NASDAQ COMP. 0.37% 11548.281629 Delayed Quote.28.71%
NIKOLA CORPORATION -0.79% 22.54 Delayed Quote.118.41%
NVIDIA CORPORATION 1.72% 543.61 Delayed Quote.131.03%
S&P 500 0.34% 3465.39 Delayed Quote.7.26%
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