The S&P 500 and Nasdaq Composite rose slightly higher Thursday as traders fought to resurrect the recent market rally that slowed earlier this week.
The S&P 500 rose 0.23% to settle at 4,283.74, while the Nasdaq inched 0.21% higher to 12,965.34. The Dow Jones Industrial Average added 0.06%, or 18.72 points, to 33,999.04.
Thursday's move bring the Dow and S&P 500 into positive territory for the week, up 0.7% and 0.08%, respectively. The Nasdaq is down 0.63%.
Retail earnings continued Thursday with reports from Kohl's, Bath & Body Works and BJ's Wholesale. The results offered insight into the health of the consumer. Kohl's shares slid after the company cut its guidance while BJ's Wholesale jumped after topping estimates.
More data released Thursday provided clues into the state of both the jobs and housing markets. Initial jobless claims fell to 250,000 for the week ended Aug. 13, while existing home sales dropped nearly 6% in July.
Thursday's moves came after the Dow on Wednesday fell nearly 172 points — snapping a five-day winning streak — as traders parsed through the minutes from the Federal Reserve's July meeting.
The central bank said it remains committed to fighting inflation, but indicated it could adjust its pace of tightening based on market conditions. Investors had hoped the Fed might slow the pace of its rate hikes after July's better-than-expected consumer price index.
"The thing in the driver's seat is the Fed and what's propelling them — the gas in the Fed's tank — is inflation," said Cliff Corso, chief investment officer at Advisors Asset Management. "I think the market is going to bounce a little bit back and forth probably for the foreseeable future, right now with a positive trend, because the market is still embedding within it the hope that the Fed is wrestling down inflation."
Stocks close slightly higher Thursday
Stocks ended Thursday's session slightly higher. The Dow inched up 18.72 points, or 0.06%, to 33,999.04, while the S&P 500 gained 0.23% to settle at 4,283.74. The Nasdaq rose 0.21% to 12,965.34.
— Samantha Subin
Earnings struggled to impress markets this season, Bernstein says
At least 90% of S&P 500 companies have reported earnings so far this season, but an analysis from Bernstein suggests many names have struggled to dazzle the markets.
"Companies missing expectations on both the top and bottom lines sold off by 380 bps on the print this quarter, while double beats were up by only 70 bps on average," wrote analyst Ann Larson in a note to clients Wednesday. "Beating on either earnings or sales, but not both, sent stocks down by 2-3 percentage points on average post report."
Of the companies that have reported earnings, 82% beat or met estimates from analysts, with real estate, industrials and energy leading the group, she noted.
That said, the earnings and sales beat ratios for the quarter have dropped below the average over the last two years, although they remain above the averages since 2008, Larson wrote.
All major averages turn positive in final trading hour
The major averages turned positive as the final hour of trading kicked off. The Dow was last up 19 points, or 0.6%, while the S&P 500 and Nasdaq Composite gained 0.37% and 0.46%, respectively.
— Samantha Subin
GMO's latest 7-year asset class projection still backs emerging markets over U.S.
Grantham Mayo van Otterloo, the Boston-based money manager co-founded by noted investor Jeremy Grantham in 1977, is out with its latest forecasts for stock and bond returns over the next seven years, and it again favors emerging market stocks over U.S. companies.
Emerging market value stocks are forecast to return 8.5% annually over the next seven years, the best among five classes of stocks measured. Emerging market stocks as a whole are estimated to return 4.9% annually, international smallcap stocks 3.2% and international large stocks 1.6%. U.S. smallcaps are projected to return -1.9% each year and U.S. large caps -2.2%.
The only positive return GMO projects in fixed income is emerging market debt, at 2.7% annually over the seven years. U.S. inflation-linked bonds are forecast to return - 1.8%, U.S. bonds -2.4% and international bonds (hedged for currency) at -3.4% per annum.
The returns are projected in after-inflation real terms, in local currency and assume a return on U.S. cash holdings of -0.4% per year. GMO also says, "U.S. inflation is assumed to mean revert to long-term inflation of 2.2% [annually] over 15 years." GMO pegs the long term historical U.S. equity return at 6.5%.
GMO managed almost $72 billion as of the end of the first quarter 2022.
— Scott Schnipper
Fed's Kashkari sees more rate hikes ahead, is unsure if they'll cause a recession
Minneapolis Federal Reserve President Neel Kashkari said Thursday that he's not sure whether raising interest rates to halt inflation will lead to a recession. He indicated that's a price the economy may have to pay.
"The question right now is, can we bring inflation down without triggering a recession? And my answer to that question is, I don't know," he during a luncheon Q&A in his home district. "We know we have more work to do in raising rates to bring inflation down."
Kashkari did not indicate whether he would be in favor of a third consecutive three-quarter-point interest rate hike at the Fed's next meeting in September.
Though he traditionally has been more dovish, or in favor of lower rates, in his approach to monetary policy, his remarks Thursday echoed some of his recent comments that he thinks the central bank needs to stay aggressive.
"I do know we have a job to do and I know we're committed to doing it," he said.
Inflation current is running near its highest levels in more than 40 years and is well above the Fed's 2% target. The central bank began raising rates earlier this year after insisting through much of 2021 that inflation would be "transitory" and subside once pandemic-specific factors abated.
Kashkari acknowledged that the Fed got the inflation take wrong.
"We didn't see inflation being that high. We didn't see inflation sticking around this long," he said. "It's our job to keep inflation at 2%, and we obviously didn't do that. So we need to get it right."
Stifel's Bannister expects 'strong finish' to 2022
Stifel's chief equity strategist Barry Bannister told CNBC's "Power Lunch" on Thursday that he believes markets should end the year on a high note as inflation subsides.
According to Bannister, the firm's models expect the headline consumer price index to drop to 3% by December as energy, goods and food prices come down.
"All of this really is supportive of a choppy market waiting to see what the Fed does next, but I think a very strong finish to the year," Bannister said.
While Bannister expects the S&P to hit the 4,400 mark, he could see the index pushing even higher to 4,600, led by big tech and growth stocks. Bannister also expects the central bank to pause its hiking cycle come December.
— Samantha Subin
Bullard says he is leaning toward another three-quarters-of-a-point hike
St. Louis Fed president James Bullard told the Wall Street Journal on Thursday that he "would lean toward" a three-quarters-of-a-percentage-point rate hike next month.
The Fed has done hikes of that size at each of its past two meetings, the biggest increases in more than two decades. Market expectations are currently split between a half-point hike and a three-quarters-of-a-point hike for the September meeting.
Bullard told the Journal that "we've got a long way to go to get inflation under control" and that "I don't really see why you want to drag out interest rate increases into next year."
Bullard is seen as one of the more hawkish members of the Federal Open Market Committee, which votes on the central bank's policy rate.
Cisco headed for best day since 2020
Wall Street cheered Cisco's stronger-than-expected results, putting the stock on pace for its biggest one-day gain since Nov. 13, 2020 — when the stock popped 7.1%.
The stock last traded higher by 6%. It also hit its highest level since May.
—Fred Imbert, Ashley Capoot
Kohl's CEO says company not worried about cash flow despite shrinking margins
Michelle Gass, the CEO of Kohl's, told CNBC's Courtney Reagan on "The Exchange" that the company is confident in its dividend and stock buyback program despite the retailer cutting its guidance.
"This is a short-term thing. As you look forward, our cash flow will be absolutely fine over time," Gass said.
The company's redesign of its stores to include retail space for Sephora is part of the short-term impact on cash flow, Gass said.
Shares of retailer are down 6% on the session.
— Jesse Pound
Expect low volume and volatility ahead, B. Riley's Hogan says
Investors should anticipate volatility ahead as one of the lowest volume weeks of the year kickstart on Monday, said Art Hogan, chief market strategist at B. Riley Financial.
"Next week is likely going to be the lowest volume week of the summer as we unwind through the dog days of summer," Hogan said. "Lower volumes tend to add volatility so don't be surprised if markets get choppy."
The shift isn't unusual as traders venture out on vacation and economic reports and earnings season slowdown. September is generally regarded as a historically weak month for stocks.
— Samantha Subin
Semiconductor stocks rise, On Semiconductor jumps 8%
Semiconductor stocks rose on Thursday, pushing the S&P 500's information technology sector higher. Shares of Broadcom, Nvidia, Micron and Applied Materials jumped more than 2% each, while ON Semiconductor soared 8%.
— Samantha Subin
Wolfspeed soars 28% on strong earning results
Shares of Wolfspeed surged 28% after topping revenue estimates in the recent quarter. The semiconductor company also posted a smaller-than-expected loss per share and shared better guidance than anticipated for the current quarter.
Wolfspeed reported a loss of 2 cents per share on $229 million in revenue for its fiscal fourth quarter. Analysts had anticipated a loss of 10 cents per share on $208 million in revenue.
— Samantha Subin
JPMorgan's Marko Kolanovic sticks to bullish market view
JPMorgan strategist Marko Kolanovic stuck to his bullish market stance Thursday, noting that the S&P 500 is now closer to his year-end target of 4,800 than to the "most common 'bearish' price target" of 3,500.
"While this was an out of consensus view, we are again out of consensus and maintain that inflation will
resolve on its own as distortions fade," Kolanovic said in a note to clients. He also pointed out that buying the dip this year has "yielded positive returns and has worked better, than e.g. suggestions to stay out of the market and start 'nibbling' at 3500 or 3300, levels that have not been reached."
The strategist has been one of the most sanguine on the Street this year, even as the Federal Reserve raises rates to temp down inflationary pressures not seen in years.
His latest comments come as the market digests a sharp off a mid-June low. In that time, the S&P 500 is up more than 16%.
To be sure, Kolanovic said he suggests "not to buy the S&P 500 as a whole and we remain open to a possibility that the final S&P 500 price slightly underperforms our target." Instead, he recommends looking at reasonably values parts of the market such as energy.
Citi: Markets are seeing a message from the Fed that 'simply is not there'
The Federal Reserve is more determined to bring down inflation than the market thinks, according to Citigroup.
As the market digests minutes released Wednesday from the Fed's last meeting in July, Citi economist Andrew Hollenhorst thinks a popular interpretation that the central bank is getting ready to decelerate policy tightening is mistaken.
"Risk markets seem determined to read a dovish message into Fed communications that we think simply is not there," Hollenhorst wrote Thursday. "A committee that values its 'resolve' in fighting inflation is unlikely to turn substantially more dovish so long as underlying inflation remains well above target and is not convincingly slowing."
The minutes stated that Federal Open Market Committee members figured that after a series of rate hikes, "it likely would become appropriate at some point to slow the pace" of increases. But there was no specificity on when that might happen, and officials repeatedly stressed the importance of bringing inflation down to 2%.
Hollenhorst said he understands the market confusion, but noted that there "is not really any informational content" in the "at some point" phrasing.
Still, markets over the summer have priced in a more timid Fed when it comes to raising rates, even after consecutive 0.75 percentage point moves in June and July.
After wavering earlier in the week, futures pricing Thursday morning indicated a 66% chance of a half-point rate hike in September, according to CME Group data. Traders see another similar-sized move in November then a quarter-point increase in December. Rates are then expected to stay in a range of 3.5%-3.75%, with the first cut priced in near the end of 2023.
Energy stocks jump again
Energy stocks moved higher on Thursday as oil prices rose following the release of fresh U.S. crude data.
— Samantha Subin
Orange juice futures hit lowest level since July 28
Orange juice futures hit 167 on Thursday. That's the lowest level since July 28 when OJ futures hit 164. Since the start of the week, OJ is down nearly 7% and on pace for its worst week since July 15.
— Samantha Subin, Gina Francolla
Cisco shares jump on earnings beat, optimistic outlook
Shares of Cisco popped more than 6% after the company beat estimates for its fiscal fourth quarter.
The networking equipment producer also shared a better-than-expected outlook for the 2023 fiscal year as supply chain issues ease. Cisco said it expects revenue growth of 4% to 6%. That's above estimates of 2.3%, according to analysts surveyed by Refinitiv.
— Samantha Subin, Jordan Novet
Bed Bath & Beyond tumbles 26%
Shares of Bed Bath & Beyond fell 26% on Thursday morning as investors reacted to activist investor Ryan Cohen's filing that he intends to sell his entire stake in the meme stock.
The filing comes after Bed Bath & Beyond had surged in August amid abnormally high trading volume. It is unclear whether Cohen has already dumped his stock.
Bed Bath & Beyond said in its own filing on Thursday that it was "pleased to have reached a constructive agreement with RC Ventures in March" and was looking at potential changes to its financial structure.
"We have been working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet, and the Company will provide more information in an update at the end of this month," the filing said.
— Jesse Pound
Existing home sales drop 5.9% in July
Existing home sales dropped 5.9% in July, the National Association of Realtors said Thursday in its monthly report. The drop brought the sales count to a seasonally adjusted annualized rate of 4.81 million units.
The findings also marked the sixth straight month of declines and the slowest pace in sales since November 2015, with the exception of a slight drop when the pandemic began. Sales also fell 20% from a year earlier.
— Samantha Subin, Diana Olick
BJ's Wholesale shares pop on earnings beat
Shares of BJ's Wholesale jumped more than 8% after the company surpassed estimates on the top and bottom lines. The retailer posted earnings of $1.06 per share on revenues of $5.01 billion and upped its outlook for the year.
Bank of America upgraded the stock to a buy rating.
Stocks open flat
Stocks opened flat on Thursday, with the Dow last down 0.05%, or 17 points. The S&P 500 slipped 0.06%, while the Nasdaq Composite moved 0.23% lower.
— Samantha Subin
Verizon shares slip on downgrade
Shares of Verizon fell about 1.7% in premarket trading Thursday after MoffettNathanson downgraded the telecommunications company.
The firm moved its rating on Verizon to underperform from market perform and slashed its price target, citing competition in the industry that's weighing on shares.
— Carmen Reinicke
Jobless claims fall for week ended Aug. 13
Initial jobless claims released Thursday dropped 2,000 to 250,000 for the week ended Aug. 13. Economists surveyed by Dow Jones had expected 260,000.
Estimates were also revised down to 252,000 for two weeks ago.
— Samantha Subin
Freshpet gets buy rating at Piper Sandler, shares rise
Shares of pet food maker Freshpet rose 2% after Piper Sandler initiated the company with a buy rating and a price target that implies 46% upside from Wednesday's close.
"Freshpet's sales have had tailwinds as pet parents increasingly treat their pets like part of their human family and feed them accordingly," analyst Michael Lavery wrote in a Thursday note.
CNBC Pro subscribers can read the full story here.
—Fred Imbert, Carmen Reinicke
Wedbush downgrades Bed Bath & Beyond as Cohen plans to sell his stake
The filing by Ryan Cohen to sell his entire stake in Bed Bath & Beyond means it is time for investors to sell as well, according to Wedbush.
Analyst Seth Basham downgraded the stock to underperform from neutral and said in a note to clients that the valuation of Bed Bath & Beyond is "disconnected" from fundamentals. Basham cited the company's high cash burn and potential restructuring ahead as areas of uncertainty.
Shares of Bed Bath & Beyond are down 10% in premarket trading, though they have trimmed their losses from Wednesday evening when Cohen's filing was officially released.
— Jesse Pound
Kohl's shares sink following guidance cut
Kohl's shares sank more than 8% in the premarket after the retailer cut its outlook for the year. The company beat analysts lowered expectations on the top and bottom lines but said inflation is putting pressure on middle-income consumers.
At the same time, Kohl's said shoppers are spending less money per transaction. The retailer also expects net sales to decline 5% to 6% for the fiscal year.
— Samantha Subin, Lauren Thomas
Jobless claims, Philadelphia Fed readings will draw attention
Investors will get a look Thursday morning at the latest jobs news as well as a manufacturing reading that could garner more interest than usual.
Initial jobless claims for the week ended Aug. 13 are out at 8:30 a.m., with the Dow Jones estimate at 260,000. That would be just a slight decline from the previous week but also representative of an upward trend that started in April.
Also out then will be the latest Philadelphia Fed Business Outlook Survey, which will gauge manufacturing activity in the region for August.
That's not generally a big data point for the market, but will be watched a little more closely after the New York Fed's Empire State Manufacturing Survey on Monday showed a stunning 40-point drop to minus-31.3. The regional manufacturing surveys are notoriously volatile, so the Philadelphia reading could help show whether the New York survey was anomalous, or indicative of a broader slowdown.
Also out Thursday are weekly export sales at 8:30, followed by existing home sales and the Conference Board's index of leading economic indicators at 10 a.m.
Elanco Animal Health falls after downgrade
Shares of Elanco Animal Health fell more than 2% in the premarket after Morgan Stanley downgraded the company to equal Wight from overweight.
"Overall, our previous Overweight thesis was predicated on a turnaround story materializing with a meaningful profit ramp ahead, where we were optimistic it would not disappoint," analyst Erin Wright said in a note. "We are now moving to the sidelines with building company-specific headwinds."
CNBC Pro subscribers can read the full story on this downgrade here.
—Fred Imbert, Carmen Reinicke
Bond yields tick lower after Fed’s meeting minutes released
Bond yields ticked downward, cooling after the previous session's rise following the release of the Federal Reserve Open Market Committee's July meeting minutes.
The yield on the benchmark 10-year Treasury note was just under one basis point lower at 2.886%, while the yield on the 30-year Treasury bond traded 1 basis point lower at 3.135%.
The yield on the shorter-term 2-year Treasury note was one basis point lower at 3.285%. Yields move inversely to prices, and a basis point is equal to 0.01%.
Markets are looking ahead to data releases on employment scheduled Thursday, including a variety of jobless claims as well as home sales figures.
— Natasha Turak
European markets muted as caution reigns after Fed minutes
European markets were mixed at Thursday's open, struggling to build on gains amid continuing market caution over the inflationary outlook.
The pan-European Stoxx 600 was fractionally lower in early trade, with industrials shedding 0.6% while oil and gas stocks gained 0.6%.
- Elliot Smith
Nomura, Goldman slash forecasts for China's 2022 GDP even further
Nomura cut its forecast for China's 2022 GDP even further, from 3.3% to 2.8%, citing latest economic data out of the country.
The latest move continues the bank's streak of having one of the lowest calls among its peers, echoing pessimism over Beijing's growth target of around 5.5%. In July, Chinese officials indicated the country might miss its GDP goal for the year.
Nomura credits worsening downswings in the current business cycle as well as China facing its worst heatwave in many years, which could dent growth in the third quarter.
Goldman Sachs also downgraded its forecast to 3% from 3.3% — citing latest data showing a slump in demand and sluggish credit growth. The report also emphasized the drag from the slump in the property sector.
The forecast reductions come after the People's Bank of China unexpectedly cut two interest rates on Monday — its medium-term policy loans and a short-term liquidity tool — for the second time this year.
— Jihye Lee
CNBC Pro: Goldman says planned energy transition is driving valuations, picks stocks that are ‘best-in-class’
The energy efficiency improvements that companies carry out will be increasingly important to investors, according to Goldman Sachs.
"Carbon is increasingly becoming a factor that impacts stock selection and equity valuation, driven by growing regulatory pressure and net zero investment strategies," the investment bank wrote in a recent August report.
Goldman identified buy-rated companies which rank well on their reductions in energy usage, and where it says energy efficiency will play a key role in the companies' competitive positioning in the long term.
— Weizhen Tan
CNBC Pro: Top tech investor Paul Meeks reveals why he thinks PayPal is a buy
PayPal has lost nearly half its market cap this year — and that's despite a strong rally over the past month.
But top tech investor Paul Meeks is still a fan of the online payments giant. He tells CNBC Pro Talks why he thinks the stock is a buying opportunity.
— Zavier Ong
Bed, Bath & Beyond tumbles as activist investor signals plan to sell position
Shares of Bed Bath & Beyond dropped nearly 16% in extended trading Wednesday after activist investor Ryan Cohen said in a securities filing he plans to exit his position in the retailer through his firm RC Ventures.
RC Ventures proposed selling 9.45 million shares of the company, the filing said. That represents the firm's entire position in Bed Bath & Beyond.
Cohen first revealed his stake in the retailer in March.
— Lauren Thomas, Jesse Pound, Pippa Stevens
Cisco, part of the Dow Industrials, jumps after hours
Cisco beat top- and bottom-line estimates, and gave better-than-expected forward guidance.
"We had a strong end to our fiscal year thanks to our Q4 performance. Our teams executed well in the midst of an incredibly dynamic environment, resulting in the highest full year non-GAAP earnings per share in the history of the company," Chuck Robbins, chair and CEO of Cisco, said in a statement.
— Pippa Stevens
Economic data on deck for Thursday
The market's been watching economic data perhaps more so than usual in recent months, to try and determine the Federal Reserve's course of action as the central bank works to fight inflation that's running around the hottest in 40 years.
First up is weekly jobless claims data at 8:30 a.m. on Wall Street. Economists are expecting 260,000 claims, according to estimates compiled by Dow Jones.
The August Philly Fed survey is also released at 8:30 a.m., with economists surveyed by FactSet expecting a reading of -5.0 after -12.3 in July.
Existing home sales numbers for July will post at 10 a.m. E.T. Wall Street is forecasting a 6.1% drop in sales, according to Dow Jones.
— Pippa Stevens