Stocks jumped Thursday to reach record levels as traders eyed a much stronger than expected print on consumer spending and a sharp improvement in the number of new jobless claims.
The Dow gained more than 300 points, or about 0.9%, to reach a record intraday and closing high and break above the 34,000 level. The S&P 500 and Nasdaq also rose to reverse declines from a day earlier, with tech stocks leading both indexes higher by more than 1%.
Traders digested a key print on the strength of the U.S. consumer on Thursday, with the Commerce Department's March retail sales showing the best monthly rise in retail sales since May 2020. Retail sales surged by 9.8%, with stimulus checks and easing social distancing standards helping fuel the gain.
"What caught our eye was the 13.4% surge in spending on food and drink services, while clothing store sales were up by 18.1%. Relative to pre-pandemic levels, food and drink services sales are down just 5.1%, while clothing store sales are now higher than they were in February 2020," Michael Pearce, senior U.S. economist for Capital Economics, said in an email Thursday. "That suggests a combination of loosening restrictions and easing of virus fears linked to the vaccine rollout are driving a rapid return to normalcy."
"Spending will almost certainly drop back in April as some of the stimulus boost wears off, but with the vaccination rollout proceeding at a rapid pace and households finances in strong shape, we expect overall consumption growth to continue rebounding rapidly in the second quarter too," he added.
Meanwhile, a new print on weekly jobless claims showed a plunge in new claims to a fresh pandemic-era low.
Members of the Federal Reserve have also underscored the recent pick-up in economic activity. In the Fed's Beige Book, or collection of anecdotes about economic conditions across the Fed districts, the central bank noted that "national activity accelerated to a moderate pace from late February to early April," with the leisure and hospitality industry especially boosted by rising demand for travel.
Other economist agreed with this assessment.
“We expect a strong rebound in growth in the second half of the year driven by vaccines, by improving virus trends, and the opening of the service sector,” Wilmington Trust's Rhea Thomas told Yahoo Finance. “All of those will come with a rebound in consumer demand that will push inflation higher as well as interest rates.”
But even given the recovery, central bank officials have stuck to their script that the economy still needs significant support as it emerges from the pandemic. Fed Chair Jerome Powell said during remarks at The Economic Club in Washington, D.C., on Wednesday that the Fed's criteria for considering an interest rate hike would not likely be reached before 2022, and that the central bank was inclined to taper its aggressive asset purchase program "well before" moving on rates.
4:05 p.m. ET: Stocks reach record highs, Dow gains 305 points, or 0.9%, amid strong economic data
Here were the main moves in markets as of 4:05 p.m. ET:
S&P 500 (^GSPC): +45.76 (+1.11%) to 4,170.42
Dow (^DJI): +305.10 (+0.90%) to 34,035.99
Nasdaq (^IXIC): +180.92 (+1.31%) to 14,038.76
Crude (CL=F): +$0.19 (+0.30%) to $63.34 a barrel
Gold (GC=F): +$28.80 (+1.66%) to $1,765.10 per ounce
10-year Treasury (^TNX): -10.8 bps to yield 1.5300%
1:15 p.m. ET: Coinbase shares rise, but come off session highs in afternoon trading
Shares rose 2% to about $335 apiece around 1:15 p.m. in New York. At session highs, the stock was trading at $349.18. A day earlier, the stock slumped 14% from its opening trade price of $381 to close at $328.28.
Bitcoin prices also pared earlier declines, trading less than 1% lower to slip from Wednesday's record highs.
11:04 a.m. ET: Business inventories rise 0.5% in February, accelerating from January gain
U.S. business inventories rose at a pace that matched consensus economist expectations in February, with restocking activity likely to serve as a boost to economic activity this year.
Business inventories increased by 0.5% in February over January, the Commerce Department said in its latest report. This marked an acceleration from January's 0.4% rise, which was upwardly revised from the 0.3% increase previously reported.
Excluding autos, retail inventories specifically rose 1.2%. This metric factors into the calculation of U.S. gross domestic product, with inventories having positive contributed to GDP growth in each of the last two quarters.
9:32 a.m. ET: Stocks open higher after strong economic data
Here's where markets were trading after market open on Thursday:
S&P 500 (^GSPC): +30 points (+0.73%) to 4,154.66
Dow (^DJI): +229.60 points (+0.68%) to 33,960.49
Nasdaq (^IXIC): +143.43 points (+1.04%) to 14,001,30
Crude (CL=F): -$0.23 (-0.36%) to $62.92 a barrel
Gold (GC=F): +$14.50 (+0.84%) to $1,750.80 per ounce
10-year Treasury (^TNX): -4.6 bps to yield 1.59%
8:38 a.m. ET: Retail sales surge by the most since May 2020
Retail sales surged by the most since May 2020 in March, with stimulus checks and easing social distancing standards generating a sharp rise in consumer spending.
Retail sales jumped 9.8% month-over-month in March, the Commerce Department said Thursday. This was greater than the 5.8% rise expected, and sharply reversed the 2.7% decline in retail sales from February.
By category, sporting goods, hobby and book stores posted the biggest monthly increase at 23.5%, followed closely by clothing and clothing accessories stores at 18.3%. Clothing store sales more than doubled their level from a year ago, during the early point of the pandemic in the U.S.
Motor vehicle and parts dealers' sales also surge by more than 15%, and food services and drinking place sales jumped 13.4% month-over-month.
8:30 a.m. ET: Jobless claims plunge to pandemic-era low
New weekly jobless claims improved far more than expected last week, reaching a fresh pandemic-era low as the labor market's recovery took a leap forward.
Initial unemployment filings totaled 576,000 for the week ended April 10. This was well below the 700,000 expected and prior week's upwardly revised level of 769,000. This was the first time in more than a year that new jobless claims broke below the 2009, Great Recession-era high of 665,000 initial claims.
Continuing unemployment claims, however, came in higher than expected, totaling 3.731 million versus the 3.700 million expected. Still, the total number of Americans filing across all programs fell to below 17 million, from the more than 18 million during the prior week.
7:22 a.m. ET: UnitedHealth shares jump after topping Q1 estimates, raising full-year guidance, but still cites virus-related impacts
Dow component UnitedHealth (UNH) posted first-quarter results and full-year guidance that came in stronger than expected.
The managed care company delivered adjusted earnings of $5.31 per share on revenue of $70.2 billion, with both metrics growing over last year and beating expectations for $4.40 per share on revenue of $69.3 billion, according to Bloomberg data. UnitedHealth sees adjusted earnings coming in between $18.10 and $18.60 per share for the full year, versus prior guidance for between $17.75 and $18.25 a share.
The guidance still includes an expected impact of $1.80 per share due to virus-related disruptions, however.
"This outlook continues to include approximately $1.80 per share in potential net unfavorable impact to accommodate continuing COVID-19 effects, such as: testing and treatment costs; the residual impact of people having deferred care in 2020; and unemployment and other economy-driven factors. COVID-19 treatment and testing during the quarter was higher than expected, paired with higher elective care deferral patterns," the company said in a statement.
7:16 a.m. ET: PepsiCo shares tick up after posted Q1 earnings, sales that topped estimates
Shares of PepsiCo (PEP) edged higher in early trading after the food and beverage giant posted first-quarter results that beat expectations, driven by an ongoing trend toward eating at home during the pandemic.
First-quarter core earnings per share were $1.21, or better than the $1.12 expected. Net revenue of $14.82 billion grew 7% over last year, or slightly slower than the 9% growth rate from the fourth quarter, but beat estimates for $14.55 billion.
"Following our first quarter results, we have greater confidence in delivering on our financial guidance for the full year," CEO Ramon Laguarta said in a press statement.
7:12 a.m. ET Thursday: Stock futures rise
Here's where markets were trading Thursday morning:
S&P 500 futures (ES=F): 4,138.50, up 20.5 point or 0.5%
Dow futures (YM=F): 33782.00, up 158 points or 0.47%
Nasdaq futures (NQ=F): 13,894.00, up 95.25 points or 0.69%
Crude (CL=F): -$0.08 (-0.13%) to $63.07 a barrel
Gold (GC=F): +$11.20 (+0.65%) to $1,747.50 per ounce
10-year Treasury (^TNX): -1.9 bps to yield 1.617%
6:01 p.m. ET Wednesday: Stock futures trade higher
Here's where markets were trading Wednesday evening:
S&P 500 futures (ES=F): 4,123.00, up 5 point or 0.12%
Dow futures (YM=F): 33,657.00, up 33 points or 0.1%
Nasdaq futures (NQ=F): 13,824.00, up 25.25 points or 0.18%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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