The Dow Jones Industrial Average on Thursday rallied more than 400 points and the S&P 500 touched a fresh 13-month high, as investors bet the Federal Reserve was close to done raising rates after the central bank this week skipped a hike.
The 30-stock Dow added 428.73 points, or 1.26%, to close at 34,408.06. The S&P 500 climbed 1.22% to finish the session at 4,425.84, while the Nasdaq Composite gained 1.15% to close at 13,782.82. Bond yields were lower, while tech stocks continued to lead the market upswing — in line with the trend on Wall Street in 2023.
Thursday's gains brought the S&P 500 and Nasdaq to their highest intraday levels since April 2022.
"The key question for the market [now] is, can value and cyclical stocks catch up to growth and tech?" said Dylan Kremer, co-chief investment officer at Certuity. "If it does, then that momentum has the ability to help grind the market higher."
The S&P 500 is also riding its longest winning streak since November 2021 and is headed for its strongest weekly gain since March. From its October closing low, the broader market index is up 23%. It's also risen 15% year to date. As for the Nasdaq, the tech-heavy benchmark is up more than 31% in 2023.
In tech, shares of Microsoft and Oracle were higher with gains of about 3.2% and 3.5%. Alibaba stock climbed close to 3.2%.
On Wednesday, Fed Chair Jerome Powell said during a post-meeting press conference that the Federal Open Market Committee would use the six weeks until its next meeting to "take into account the cumulative tightening of monetary policy." He added that a decision on July's policy move has not yet been made. The upswing on Thursday shows investors remain willing to place bets on the overhang of uncertainty heading into the July FOMC meeting.
Still, Powell insisted that the central bank will likely raise rates further this year, and said the Fed will remain data dependent on a month-by-month basis. Stocks whipsawed throughout Powell's comments on Wednesday.
Additional economic data releases Thursday morning gave investors and policymakers better insight on the strength of the labor market and consumer spending. Weekly jobless claims numbers were slightly above estimates at 262,000 compared to a Dow Jones estimate of 245,000, while retail sales ticked up 0.3%.
All three major indexes notched gains at the closing bell on Thursday as traders continue to bet that the central bank is nearing the end of its rate tightening cycle.
The Dow Jones Industrial Average added 428.73 points, or 1.26%, to close at 34,408.06. The S&P 500 climbed 1.22% to finish the session at 4,425.84, while the Nasdaq Composite gained 1.15% to close at 13,782.82.
The S&P 500 and Nasdaq Composite both earned gains for the sixth-straight session.
— Brian Evans
As if the first half of the year hasn't been unexpected enough, moves in Friday's trading could be exacerbated further by "quadruple witching" in derivatives — the quarterly expiration of options on individual stocks, stock index futures contracts, options on stock indexes and options on stock-index futures — plus the quarterly rebalancing of some of the underlying indexes themselves.
If nothing else, trading volume is exceptionally high on expiration days. TradeStation, which owns online securities and futures brokerages and trading technology companies, says the single busiest trading day of the second half of 2022 came on Dec. 16, 2022, the fourth quarter's witching day.
Meanwhile, S&P Dow Jones and some other providers rebalance their indexes on the third Friday of each quarter's final month, changing the weightings of individual stocks, higher or lower. June's third Friday is tomorrow, so both the S&P 500 and the Nasdaq-100 indexes are rebalanced, which will affect demand for some stocks.
For perspective, the Stock Trader's Almanac says that the expiration week is often higher in bull markets and down in bear markets — the S&P 500 is up about 3% so far this week and the Nasdaq Composite by about 4% — but that the Dow Jones Industrial Average has fallen on six of the last seven June expiration days.
— Scott Schnipper
The Dow and S&P 500 are running circles around historical averages for June about halfway into the month, according to data from the Stock Trader's Almanac.
In a typical June, the Dow has shed 0.2% on average. But so far this month, the 30-stock average is up 4.4%. That also puts it ahead of the overall average, with a typical month bringing a relatively modest 0.7% advance.
Similarly, the S&P 500 has rallied 5.5% this month, blowing past the historical June average of just 0.1% gained. When averaging the historical performance of all months for the S&P 500, the index typical adds 0.7%.
That performance means both have defied conventional wisdom, with June historically considered a weak month. On average, it has brought the second worst historical performance for the Dow and fourth worse for the S&P 500.
— Alex Harring
Individual investor bullishness on the outlook for stocks over the next six months rallied to 45.2%, the highest since Nov. 2021 — up from 27.4% just three weeks ago — in the latest weekly survey from the American Association of Individual Investors. The historical average is 37.5%.
Bearish sentiment slid further, to only 22.7% of investors — the lowest since July, 2021 and down from 39.7% three weeks ago. The historical average is 31.0%.
The AAII results echoed sentiment seen in the latest Investors Intelligence survey earlier this week, when the percentage of bullish financial newsletter writers climbed to 53.4% — the most bulls since November, 2021 when they reached "a danger level of 57.2%," II said.
Contrarians associate rising bullishness with elevated risk in the stock market and, conversely, high bearish readings with diminished risk.
— Scott Schnipper
Microsoft surged to a new 52-week high on Thursday, trading near levels it hasn't seen since November 2021 when it notched an all-time high of $349.67 per share. The stock was last trading at $346.20 per share.
The tech stock is higher by more than 44% this year as Microsoft continues to ride investor enthusiasm for artificial intelligence, a trend that has pushed other tech stocks to notable milestones.
Microsoft shares last popped 2.5% during midday trading.
— Sarah Min
Regional bank stocks were higher broadly on Thursday, with the SPDR S&P Regional Banking ETF (KRE) climbing 1%. The fund has gained 19% over the past month.
Shares of PacWest, Citizens Financial and Valley National helped lead the KRE higher with gains of 1.5%, 1.8% and 3%, respectively.
— Brian Evans
The market is underrating the growth story at McDonald's, according to Guggenheim
Analyst Gregory Francfort reiterated a buy rating and best idea status for McDonald's, raising earnings estimates for 2024.
"Investors generally prefer to find tangible drivers of sales (promotions or new dayparts) but
we think McDonald's success is the cumulative effect of years of investment in the asset base, improvements in the marketing message, and a digital engagement story that has legs. The next driver of MCD's McMultiple will likely be a step-up in long-term unit growth guidance later this year at a planned Investor Day (from +3.7% in 2023 to what we expect will be +4-5% over 2024-2026)," Francfort said in a note to clients.
Shares of McDonald's are up 9.5% year to date.
— Jesse Pound
Shares of Cava rose sharply in early trading for the restaurant's initial public offering.
The stock opened trading at $42 per share, more than 90% above the $22 per share deal price. Cava then extended its gains and is now up more than 100% in its first trading session.
— Jesse Pound
The S&P 500 built on its upward momentum Thursday, breaking above 4,400 for the first time since April 2022.
— Fred Imbert
Shares of Diageo's U.S.-traded shares added 0.4% Thursday following a downgrade from Goldman Sachs. The firm lowered its rating on shares to neutral from buy, citing a prolonged normalization period in the U.S. spirits market.
"With muted growth in the US, we see limited positive catalysts for Diageo and thus limited scope for earnings upgrades for the group," said Nicolaï.
The analyst noted that even without having factored in a recession into his forecasts for Diageo, he anticipates lackluster sales growth in 2023 and 2024.
CNBC Pro subscribers can read more about the downgrade here.
— Hakyung Kim
The firm reinstated T-Mobile to its list of top picks in telecom services.
"T-Mobile is one of the only companies in our coverage (along with Iridium) with a sizable buyback program who is able to take advantage of market volatility. The company offers investors low leverage, strong FCF generation, a recurring revenue model, network leadership, growing market share and reasonable valuations," analyst Simon Flannery wrote in a Thursday note. Shares were up 2.5% Thursday.
CNBC Pro subscribers can read more about the call here.
— Hakyung Kim
Stocks were mixed Thursday as investors contended with comments from central bank chair Jerome Powell a day earlier.
The S&P 500 fell 0.2% at the opening bell, while the Dow Jones Industrial Average added 13 points or 0.05%. The tech-heavy Nasdaq Composite slipped 0.5%.
— Brian Evans
The U.S. dollar reached a high not seen since November when compared with the yen.
The greenback reached 141.50 against the yen. That's the highest level since Nov. 23, 2022, when it hit 141.61.
Meanwhile, the dollar index was negative as the euro reached a high against the dollar not seen in nearly a month. The euro hit 108.78 against the dollar, which was the highest since May 16 when it notched 1.0904.
— Alex Harring, Gina Francolla
Citi says it has "greater conviction" in Corning's margin recovery potential. The firm upgraded the glass maker's shares to buy from neutral in a Wednesday note.
"While demand in Corning's end markets (consumer electronics, fiber upgrades) remains more tempered near term, we believe margin improvements will drive positive estimate revisions ahead. As markets recover, we expect these initiatives will drive significant operating income expansion ahead," said analyst Asiya Merchant.
CNBC Pro subscribers can read more about the call here.
— Hakyung Kim
Thursday morning saw a wide variety of economic data released. Here are the results against estimates from the Dow Jones consensus:
—Jeff Cox
The European Central Bank on Thursday boosted its benchmark interest rate by a quarter percentage point as it seeks to bring down an inflation level that policymakers believe is still too high.
As expected, the ECB bumped up its deposit rate by 25 basis points, or 0.25 percentage points, to 3.5%. That took the refinancing rate up to 4% and its marginal lending facility to 4.25%.
"Inflation has been coming down but is projected to remain too high for too long," the ECB's Governing Council said in its post-meeting statement. "Indicators of underlying price pressures remain strong, although some show tentative signs of softening."
ECB economists see core inflation rising to 5.1% this year before falling to 3% in 2024 and 2.3% in 2025. Like the U.S. Federal Reserve, the ECB targets inflation at 2% annually.
—Jeff Cox
These are some of the stocks making the biggest moves before the bell:
— Alex Harring
Domino's Pizza shares were up 2% Thursday during premarket trading after Stifel upgraded shares to buy from neutral.
Analyst Chris O'Cull wrote in a Thursday note that "over the next 12 months, the company will stabilize delivery sales and continue growing carryout sales to new record levels. Better sales performance, lower commodity costs, and higher labor productivity should boost franchisee profitability, sparking greater unit growth."
CNBC Pro subscribers can read more about the upgrade here.
— Hakyung Kim
The retailer raised its quarterly dividend by 1.9% to $1.10 per share from $1.08. Target shares rose slightly in the premarket after the news. The stock has been under pressure recently, losing nearly 20% this quarter amid anti-Pride backlash.
— Fred Imbert
U.S. Treasury yields climbed slightly on Thursday as investors digested the Federal Reserve's latest interest rate decision, which saw the central bank pause its rate-hiking campaign, and weighed the policy outlook. Guidance issued alongside the rate decision indicated that officials are expecting two more hikes this year.
At 4:29 a.m. ET, the yield on the 10-year Treasury was up by more than two basis points to 3.8232%. The 2-year Treasury was last trading at 4.7267% after rising by just under two basis points.
— Sophie Kiderlin