Markets

Stocks rebound from massive sell-off, S&P 500 closes more than 1% higher as tech gains

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Wall Street will look to recover from Wednesday's massive sell-off

Stocks rose on Thursday, clawing back some of their losses from the previous session, as shares of major tech companies advanced ahead of their quarterly earnings reports. Sentiment also got a lift from better-than-expected economic data.

The S&P 500 climbed 1.2% to 3,310.11 and the Nasdaq Composite advanced 1.6% to 11,185.59. The Dow Jones Industrial Average closed 139.16 points higher, or 0.5%, at 26,659.11. Thursday marked the first daily gain for the Dow in five days. The S&P 500 snapped a three-day slide.

Shares of Amazon and Apple rose 1.5% and 3.7%, respectively. Alphabet closed 3.1% higher and Facebook popped nearly 5%. Six of the 11 S&P 500 sectors gained more than 1%, including tech and communication services. Netflix, meanwhile, surged more than 5% after the company announced it will raise prices for U.S. subscribers.

Amazon and Alphabet reported better-than-expected earnings after the bell along with Facebook. Apple was slated to report later in the evening.

Earnings expectations for Big Tech companies were high given their lofty valuations relative to the broader market.

"Expectations are always going to be high when your share price is near the 52-week high, but these are quality companies," said Nate Fischer, chief investment strategist at Strategic Wealth Partners. "People always talk about staple stocks, well these are internet staples ... So it's hard to turn your eye away from them."

More than 260 S&P 500 companies have reported calendar third-quarter earnings thus far. Of those companies, 85% have reported better-than-expected earnings, according to Refinitiv. Despite the high beat rate, several companies have seen their stocks fall after releasing their quarterly results.

Better-than-expected GDP, jobless claims data

U.S. gross domestic product for the third quarter expanded at a 33.1% annualized pace, its fastest growth ever. The reading came after a 31.4% plunge in the second quarter and was better than the 32% estimate from economists surveyed by Dow Jones.

"Overall, the initial recovery in GDP after the first wave of lockdowns were lifted was stronger than we originally anticipated," said Paul Ashworth, chief U.S. economist at Capital Economics. "But, with coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower."

Meanwhile, the number of first-time unemployment-benefits filers declined for a second straight week and hit its lowest level since March. Initial weekly U.S. jobless claims came in at 751,000 for the week ending Oct. 24, better than a Dow Jones estimate of 778,000.

Thursday's moves came a day after the market's biggest sell-off in months. Both the Dow and S&P 500 had their worst day on Wednesday since June. The Nasdaq had its biggest one-day drop since Sept. 8.

The sell-off mirrored a rough day for European markets, as rising Covid cases on that continent spurred leaders of Germany and France to announce new lockdown restrictions for the next month. Average daily Covid-19 cases in the U.S. set another all-time high on Wednesday, marking the fourth consecutive day the nation topped its prior daily record.

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