MARKET SNAPSHOT: Stocks Close Higher As Tech, Economic Data Power Rebound
By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica
Political drama out of Washington may continue to dog investor sentiment
U.S. stocks closed higher Thursday, following the previous session's brutal selloff, as positive data offered a glimmer of optimism and technology provided an additional fillip to the market.
The Nasdaq Composite Index finished up 43.89 points, or 0.7%, at 6,055.13, after briefly losing its grip on the psychologically significant level of 6,000 in opening trade. On Wednesday, the technology-heavy index saw its worst one-day decline since late June .
The index was supported by rebounds in major technology names, including Apple Inc.(>> Apple Inc.), Amazon.com Inc. (>> Amazon.com, Inc.), and Facebook Inc. (>> Facebook Inc), all of which closed up 1.5% or more on the day. The three are all among the largest companies by market value, which helped to boost the overall market. The broader market was more evenly divided, with slightly more advancing stocks than decliners on the New York Stock Exchange.
The Dow Jones Industrial Average closed up 56.09 points, or 0.3%, at 20,663.02, after a brief peak during the session at above-100-point gains. The blue-chip average was led higher by shares of Wal-Mart Stores Inc.(>> Wal-Mart Stores Inc), which closed up 3.2% as earnings beat Wall Street forecasts, but revenue fell slightly short .
Meanwhile, shares of Cisco Systems Inc.(>> Cisco Systems, Inc.) dragged on the Dow, falling 7.2% and hitting their lowest level since January as the networking giant reported its revenue decline was accelerating and said it would lay off another 1,100 workers .
The S&P 500 index rose 8.69 points, or 0.4%, to close at 2,365.72, as nine out of 11 sectors finished higher, with the telecom, consumer-discretionary and tech sectors leading the charge.
Both the Dow and the S&P 500 suffered their worst daily slump since early September in the previous session.
Equities were helped in part by the latest economic data. Initial jobless claims fell by 4,000 in the latest week, the second-lowest reading of the economic recovery , which began eight years ago. Continuing claims were at their lowest level since 1988. Separately, the Philadelphia Fed manufacturing index jumped to a reading of 38.8 in May from 22 in April .
While investors have been holding firm in light of the drama out of Washington, Wednesday's revelations caused the market to question whether controversies surrounding the White House would derail President Donald Trump's economic agenda, said Karyn Cavanaugh, senior market strategist at Voya Financial, in an interview.
"Investors wanted a pullback and they got one," Cavanaugh said. "We're still looking forward to pro-growth policies and no matter who is in the White House, we're still looking for pro-growth policies."
The lack of a follow-through in that selloff on Thursday points to the thinking that the economy is still doing relatively well , that companies turned in a strong earnings quarter, and that the drama out of D.C. will have little effect on how companies are doing business, Cavanaugh said.
"Even though optimism for Trump's pro-growth agenda has mostly unwound, if this political crisis deepens and elevated volatility persists, equities could see further weakness in the short-term driven by deleveraging across fundamental and systematic strategies," J.P. Morgan wrote in a note to clients, adding that "fundamentals remain supportive."
Wednesday's decline came after the New York Times reported that Trump had asked former FBI Director James Comey to drop an investigation into possible ties between his inner circle and the Russians . Among other things, the controversy was seen as making the passage of Trump's economic agenda -- something analysts say is necessary to justify market valuations -- less likely.
Wall Street could continue to be driven by the news coming out of Washington. Earlier on Thursday, Reuters (http://www.reuters.com/article/us-usa-trump-russia-contacts-idUSKCN18E106) reported that former National Security Adviser Michael Flynn and others on Trump's campaign team exchanged at least 18 undisclosed phone calls or emails with Russian contacts during the 2016 presidential race.
"The scandal is so dominant at the moment that I guess it doesn't take a lot to spook investors," said Connor Campbell, financial analyst at Spreadex, in emailed comments.
Need to know: The wheels are coming off for U.S. stocks, this classic gauge shows
The reports have sparked talk of potential impeachment for Trump, though many believe the situation is far from reaching that point . In one recent development, former FBI head Robert Mueller has now been named as special counsel to investigate potential collusion between the Trump campaign and Russia.
Stocks to watch:Alibaba Group Holding Ltd.(>> Alibaba Group Holding Ltd) rose 0.5% even after earnings fell short of expectations.
Shares of Pandora Media Inc.(P) rose 5.5% after a report that Liberty Media is in talks to buy the internet radio company.
CarMax Inc. (>> CarMax, Inc) shares rallied 6.2% after Wedbush Securities raised their price target on the stock to $70.
Shares of Incyte Corp.(>> Incyte Corporation) and ImmunoGen Inc.(>> ImmunoGen, Inc.) jumped on promising results from an experimental lung cancer drug. Incyte shares finished up 6.9% while ImmunoGen shares closed up 14%.
U.S.-listed shares of Brazil stocks and exchange-traded funds were under pressure after the country's opposition lawmakers called for President Michel Temer to resign after a bribery allegation. U.S.-listed shares of Brazilian multinational Vale SA(>> Vale SA) tumbled 6.3%, while the iShares MSCI Brazil Capped ETF(EWZ) dropped 16%.
Cleveland Fed President Loretta Mester reiterated comments similar to those from May 8, stating that she sees stronger consumer spending ahead and that the Fed needs to keep raising rates.
The dollar fluctuated between gains and losses and was last down less than 0.1%, with the British pound popping above $1.30 for the first time since September after strong retail sales.
Overseas markets: Global stocks fell Thursday in the wake of the U.S. selloff. The Nikkei 225 index slid 1.3% alongside a sharp rise in the Japanese yen, which has surged as investors seek out perceived haven assets.
European stocks finished lower as the Stoxx Europe 600 index finished down 0.5%, adding to a 1.2% decline Wednesday that marked its biggest one-day percentage loss since Sept. 26.
Gold prices settled down 0.5% at $1,252.80, while oil prices traded higher , with West Texas Intermediate crude settling up 0.6% at $49.35 a barrel.
--Barbara Kollmeyer in Madrid contributed to this article.