Main indexes in the U.S. and Canada ended higher on Thursday, led by growth stocks in light trading, as U.S. unemployment data signaled the Federal Reserve’s interest rate hikes might be starting to dent labour market strength in its bid to fight inflation.
All 11 S&P 500 sector indexes rose, with communication service and technology the biggest winners. Most sectors also gained in Toronto, led by a 3% jump in technology.
“It’s just relief,” said Keith Buchanan, portfolio manager at GLOBALT Investments in Atlanta. “Selling pressure has been overwhelming the market recently and we could be having a break. That allowed room for stocks to move, and with lower volume (that) can materialize into a pretty good day.”
Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com Inc, whose shares have been battered in the past few sessions, each gained more than 2.5%.
The U.S. Labor Department said weekly initial jobless claims rose by 9,000 to a seasonally adjusted 225,000, in-line with expectations, while continuing claims rose by 41,000 to 1.71 million, the highest since February.
The report hinted at some softening in an otherwise tight labour market, bolstering hopes that the U.S. central bank would dial down its aggressive monetary policy stance.
“Signs of the job market beginning to weaken is certainly apparent,” said Peter Cardillo, chief market economist, Spartan Capital Securities LLC.
“We’re at the end of the year and of course, the market has not performed well. We’re seeing some bargain hunting coming in today.”
The yield on 10-year Treasury notes fell 2.2 basis points to 3.864% on the U.S. jobs data.
The Fed’s aggressive interest rate hikes have hammered equities this year, with the benchmark S&P 500 shedding 19.3% and the tech-heavy Nasdaq tumbling nearly 33%.
The technology, consumer discretionary and communication services sectors - which house several rate-sensitive high growth shares - are down between 29% and 40% this year, making them the worst performers among S&P 500 sector indexes.
Energy shares have bucked the trend with stellar annual gains of 57%.
Wall Street’s main indexes dropped more than 1% on Wednesday, with the Nasdaq hitting a 2022 closing low as rising COVID cases in China and geopolitical tensions added to fears of a likely recession in 2023.
However, investor preference for high-dividend yielding stocks with steady earnings has limited losses in the Dow Jones Industrial Average, which is down just 8.5% for the year.
On Thursday, the Dow rose 345.09 points, or 1.05%, to 33,220.8; the S&P 500 gained 66.06 points, or 1.75%, at 3,849.28; and the Nasdaq Composite added 264.80 points, or 2.59%, at 10,478.09.
The S&P/TSX Composite index closed at 19,485.89, up 201.79 points, or 1.05%.
The TSX’s energy group rose 1.4%, while the financials sector climbed 1.3%.
West Texas Intermediate crude futures fell 0.46%, or $0.36, to US$78.6 a barrel.
The TSX is off 8.1% for the year.
Reuters, Globe staff