The U.S. stock market finished higher on Thursday as new economic data increased optimism that the Federal Reserve could soon end its monetary tightening cycle.
The Dow Jones closed at 34,029.69, rising 383.19 points or 1.14 percent. The S&P 500, which tracks the top U.S. companies, finished at 4,146.22, gaining 54.27 points or 1.33 percent. Meanwhile, the Nasdaq Composite posted its biggest one-day percentage jump in almost a month, rising by 1.99 percent to 12,166.27.
All major sectors within the S&P 500 index closed higher except for real estate. On Wednesday, communication services and consumer discretionary were the highest-performing sectors, gaining 2.3 percent, respectively.
Rate-sensitive mega-cap stocks propped the stock market. Tech-giant Apple gained 3.41 percent to 165.56, while rival Microsoft closed 2.24 percent higher to 289.84. Amazon also saw a 4.67 percent growth to 102.40.
Shares of e-commerce marketplace Groupon jumped four percent after the firm announced that Jiri Ponrt would take over the chief financial officer position from Damien Schmitz. Streaming service Netflix also gained 4.6 percent after analysts predicted the platform’s recent growth of new subscribers could boost profitability.
Delta shares, on the other hand, plummeted 1.1 percent after the airline reported lower-than-anticipated first-quarter profit. Motorcycle manufacturer Harley-Davidson also fell 1.7 percent after announcing that chief financial officer Gina Goetter would end her tenure this month.
“Markets rallied today following the lower inflation data this morning, as it’s still all about the Fed so it’s really all about inflation.”
David Carter, Investment Specialist at JPMorgan
JPMorgan investment specialist David Carter said the market rallied due to lower inflation producer price data published before the opening bell. The producer price index (PPI) from March suggested cooling inflation. Carter added that the PPI and “muted” consumer price index (CPI) from the day before could soon make the Fed end its aggressive rate hikes.
Futures tied to the Fed’s policy predict a one-in-three chance that the central bank will pause the interest rate hike next month. The federal funds rate currently stands in the 4.75 to 5.00 percent range.
Asian stock markets generally rallied after Wall Street closed higher. The MSCI Asia-Pacific index, excluding Japan, gained 0.34 percent to 526.52.
Japan’s Nikkei 225 index jumped 1.20 percent to 28,493.47, while South Korean Kospi gained 0.38 percent to 2,571.49. The Hang Seng index in Hong Kong closed at 20,438.81, climbing by 0.46 percent. China’s blue-chip index, CSI 300, traded 0.57 percent higher to 4,092.00.
The ASX 200 index in Australia finished at 7,361.60, gaining 0.51. Australia reported a robust employment market in March, propping its currency against the U.S. dollar. In New Zealand, the benchmark NZX 50 fell by 0.42 percent.
Market shifts attention to corporate earnings
Investors are now shifting their attention to first-quarter earnings reports by U.S. companies, which will inform the market about the economy’s health. Analysts forecast the cumulative first-quarter S&P 500 earnings to decline by 5.2 percent year-over-year.
Three large U.S. banks — JPMorgan, Citigroup and Wells Fargo — will publish their earnings reports on Friday. After two bank implosions last month, investment strategists said bank earnings were important to gauge the sector’s soundness.
“Tomorrow’s bank earnings could give insight into the strength of regional banks and future lending activity,” Carter said. “It will be interesting to see what banks say tomorrow about future economic growth.”
Analysts have warned that the banking crisis in March can have a lasting effect on the economy as it will create tighter loan requirements, preventing many businesses and households from obtaining loans.