Markets

Stocks close slightly higher as gains in tech offset worries about the economy

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Stocks rose slightly on Thursday as broad gains in major tech names served as a counterweight to disappointing unemployment data.

The Dow Jones Industrial Average gained 46.85 points, or 0.1%, to 27,739.73, snapping a three-day losing streak. The S&P 500 gained 0.3%, or 10.66 points, to 3,385.51. The Nasdaq Composite jumped 1%, or 118.49 points, to 11,264.95, hitting a new record close.

Apple, Facebook, Netflix, Alphabet and Microsoft all rose at least 2%. Amazon climbed 1.1%. Intel shares gained 1.7% after the company announced an accelerated buyback plan, calling its stock cheap. Tesla jumped 6.5% to close above $2,000 for the first time ever.

Tech has been the best-performing sector in the market this year, leading the S&P 500 back from its late-March low. Facebook is up more than 30% year to date and Apple has rallied more than 60% over that time period. Amazon, meanwhile, has surged over 78% in 2020 while Netflix gained more than 50%.

"This tech outperformance is to be expected given the uniqueness of this environment, but that uniqueness is beginning to fade," said Jeff Kleintop, chief global investment strategist at Charles Schwab. "It seems we've left the recession behind us and, hopefully, we're now past the peak of new coronavirus cases in most of the developed world, including the U.S."

"That may mean a return to more cyclical leadership in this road to a recovery," Kleintop added. He also noted the small-cap Russell 2000 index has outperformed the S&P 500 this month. 

Jobless claims back above 1 million

U.S. weekly jobless claims totaled 1.106 million last week, the Labor Department reported. Economists polled by Dow Jones had expected 923,000 first-time applicants during the week ended Aug. 15. In the week prior, the tally had dropped below 1 million for the first time since mid-March.

The jump in unemployment claims came as lawmakers struggled to move forward on a new coronavirus stimulus bill. Recently, an additional unemployment benefit for those impacted by the pandemic expired. 

"We can't even be sure this recovery is sustainable as the economy got a huge boost from consumers' wallets lined with $500 billion of stimulus from Washington from those $1,200 and $600 checks," said Chris Rupkey, chief financial economist at MUFG. "That money is gone and with it the prospects for a lasting economic recovery where everyone on Main Street benefits. At the moment only stock market investors are riding high as the Federal Reserve's money printing benefits Wall Street more than Main Street."

However, continuing claims, which refer to those receiving unemployment benefits for at least two straight weeks, continued to decline. They fell by 636,000 to 14.844 million in the week ending Aug. 8. 

Thursday's data release came a day after the Federal Reserve released its July meeting minutes which said, "the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term." 

The Fed's comment knocked the S&P 500 from a new intraday record set on Wednesday. The benchmark closed at a new record high on Tuesday, confirming the start of a new bull market.

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—CNBC's Yun Li contributed to this report.