Dow erases a 300 level loss and rises greater than 100 factors in unstable buying and selling
US stocks offset previous losses and rose in volatile trading on Thursday as the market tried to rebound from a two-day streak of losses.
The S&P 500 rose 0.4% while the Dow Jones Industrial Average gained 120 points after losing 348 points. The Nasdaq Composite also gained 0.2%.
The market experienced some weakness earlier in the day when US Federal Reserve Chairman Jerome Powell suggested that one day work would begin to erode the stimulus that boosted the market during the pandemic.
“As we continue to make significant progress toward our goals, we will gradually reduce the amount of treasury and mortgage-backed securities we purchase,” Powell told NPR’s Morning Edition. “Over time, when the economy has recovered almost completely, we will, very gradually and with great transparency, withdraw the support we gave in times of need.”
The top three averages are still on track to hit a week of losses, with the S&P 500 and Dow each falling 1%. The Nasdaq is down more than 2% this week. The S&P 500 and blue-chip Dow hit record highs last week.
Oil prices fell about 4% on Thursday as demand rekindled with new lockdowns from the coronavirus pandemic. The S&P 500 energy sector was down more than 2%.
The tech-heavy Nasdaq was the relative underperformance this year, with a flat return compared to the S&P 500’s 3% gain. Some investors took profits on their growth winners, causing the market to rebound from last year’s pandemic losses.
“The weakness in technology stocks is undeniable, but the sector is unlikely to be a straight line and there will be zig-zags along the way,” said David Bahnsen, chief investment officer at The Bahnsen Group. “Tech stocks are valued too high and are crying out for a correction.”
Pressure on stocks rose as bond yields continued to decline from recent highs. The yield on 10-year government bonds fell 2 basis points to below 1.6% and fell for a fourth day after interest rates hit a 14-month high last week.
Investors have been concerned about a better-than-expected reading of weekly jobless claims. According to the Department of Labor, initial unemployment insurance claims for the week ended March 20 totaled 684,000, an estimate of 735,000 by economists polled by Dow Jones.
“The signs of strength from today’s jobless claims can actually perverse the broader market,” said Mike Loewengart, chief executive of investment strategy at E-Trade. “”That is, if the labor market continues to advance, it could put pressure on stocks and the Fed to rethink its accommodative stance. “