Stocks ended solidly higher on Thursday, gaining momentum after a debt ceiling extension agreement was reached in Congress and ahead of Friday’s crucial employment report.
The Dow briefly rose above its 50-day moving average of 34,916.88 during trading hours, but now needs to gain 0.4% to get back to that level. The index has not closed above that key technical level since Sept. 8, marking the longest stretch below that level since a period between February and April of 2020.
“The market has just been focusing on the debt ceiling for the past two weeks,” says Dave Wagner, portfolio manager and analyst at Aptus Capital Advisors. “The market is now focused on the nonfarm payrolls.”
Senate Majority Leader Chuck Schumer (D-N.Y.) said a deal between Republicans and Democrats had been reached to extend the government’s debt ceiling until December.
“This ‘removes’ a high-risk event and given the recent selling pressure we are seeing a sharp move higher,” writes Michael Reinking, senior market strategist at the New York Stock Exchange.
Now, the U.S. market is looking forward to the U.S. jobs report Friday, which measures nonfarm payrolls. Investors want to see that, as pandemic-related benefits expire, people are incentivized to go back to work.
Friday’s employment report from the Bureau of Labor Statistics will make all the difference on the market’s view of the job market and economic recovery. Economists expect September payrolls to have increased by 500,000.
Investors may have gotten an early read on the job market, as weekly initial jobless claims were 326,000, better than the expected 345,000 and lower than last week’s result of 364,000.
“The next two payroll reports are critical,” wrote Tom Graff, head of fixed-income at Brown Advisory. “During the first half of 2021, many blamed weak labor force participation on generous unemployment benefits. As of this payroll report, those have expired completely.”
Recently, better-than-expected economic data have provided quick boosts for stocks. In the summer, data had been disappointing, partly because of rising Covid-19 cases.
For Friday’s trading, if the employment result shows more than 750,000 jobs were added in September, bond yields could pop in response to anticipated spending and inflation, writes Tom Essaye, founder of Sevens Report Research. That, he notes, could cause stocks to fall. A number too low, of course, could send both yields and stocks down.
Overseas, Hong Kong’s
rose 3.1%, led higher by shares in technology companies amid optimism that U.S.-China relations would soon thaw. The pan-European
was 1.6% higher.
Russian President Vladimir Putin’s offer of help to “stabilize” the natural-gas market in Europe—where prices have surged around 500% this year—has calmed worries of an energy crisis in the region and helped cool commodity prices.
European natural-gas prices eased 10% Wednesday, declining again Thursday, while coal fell 10%.
Here are eight stocks on the move Thursday:
Industrial software company
Aspen Technology (ticker: AZPN) stock rose 9.7% as manufacturer
Emerson Electric (EMR) is considering merging its software business with Aspen.
Conagra Brands (CAG) stock was falling 0.7% after the company reported a profit of 50 cents a share, beating estimates of 49 cents a share, on sales of $2.65 billion, above expectations for $2.53 billion.
Schlumberger (SLB) stock gained 3.6% after getting upgraded to Overweight from Neutral at JPMorgan.
Five Below (FIVE) stock rose 6% after getting upgraded to Overweight from Equal Weight at Morgan Stanley.
Square (SQ) jumped 4.3% after the payments group was upgraded to Buy from Hold by Jefferies, which assumed coverage of the company with a target price implying 25% upside to the stock.
Alibaba (BABA) rose 7.3% in Hong Kong with the U.S.-listed shares poised for a similar rally. Chinese tech stocks, like
Tencent (0700.H.K.), which jumped 5.6% in Hong Kong, have been under pressure all year, but were boosted amid optimism that U.S.-China relations would improve. White House officials plan to schedule a meeting between President Joe Biden and President Xi Jinping in coming weeks, The Wall Street Journal reported.
Chinese Estates (0127.H.K.) rose 31.7% in Hong Kong after the former shareholder in embattled developer
China Evergrande (3333.H.K.) revealed a $245 million take-private offer, representing a significant premium to the current stock price.
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