The major domestic equity indexes moved higher on Thursday on the anticipation of a strong earnings season. In addition, Trump implied that a military strike on Syria may not be imminent, which in turn ratcheted down geopolitical worries. As a result, the S&P 500 has now recouped nearly all its losses from earlier this year.
Trump said in a tweet on Thursday that a possible attack on Syria could occur “very soon or not so soon at all,” easing fears of confrontation with Russia. That lifted yields resulting in a 1.8 percent increase in the financial sector index, which had its largest percentage advance among the S&P’s 11 major sectors.
The technology sector rose 1.3 percent, adding the most gains to the S&P.
Strong quarterly results from BlackRock and Delta added to the sanguine mood. Delta topped profit estimates, sending its shares 2.9 percent higher and helping to raise the shares of other airlines.
BlackRock gained 1.5 percent after the asset manager’s quarterly profit rose more than expected.
The earnings season begins in earnest on Friday with reports from JPMorgan Chase, Citigroup and Wells Fargo.
Analysts expect quarterly profit for S&P 500 companies to rise 18.4 percent from a year ago, in what would be the largest gain in seven years, according to Thomson Reuters I/B/E/S.
Investor sentiment was also raised by the weekly initial jobless claims report, which pointed to sustained labor market strength.
Facebook was a notable laggard among technology stocks, falling 1.5 percent following a 5.3 percent gain over the past two days.
Bed Bath & Beyond fell 20.0 percent after the company’s full-year profit forecast missed estimates.
Approximately 6.12 billion shares changed hands on the major domestic equity exchanges, as compared to the 7.27 billion share average over the past 20 trading days.
Day’s Economic News
New applications for unemployment benefits fell last week, pointing to sustained labor market strength despite a sharp slowdown in job growth in March. Meanwhile,
import prices were flat in March amid a sharp decline in the cost of petroleum products, although underlying imported inflation pressures are steadily rising. This together with a tightening labor market strengthens expectations inflation will gain steam this year.
A trade war between the United States and China could fan price pressures and push the Federal Reserve on to a more aggressive path of interest rate increases. Washington and Beijing have threatened each other with tens of billions of dollars’ worth of tariffs.
The Labor Department reported on Thursday morning that Initial claims for state unemployment benefits fell by 9,000 claims to seasonally adjusted 233,000 claims for the week ended April 7.
Claims tend to be volatile around this time of year because of different timings of the Easter and school spring breaks, which can throw off the model that the government uses to smooth the data for seasonal fluctuations.
The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, rose by 1,750 claims to 230,000 claims last week.
The labor market is near or at full employment. The unemployment rate is at a 17-year low of 4.1 percent, not too far from the Fed’s forecast of 3.8 percent by the end of this year.
In a second report on Thursday, the Labor Department reported that March’s unchanged reading on import prices was the weakest since last July and followed a 0.3 percent increase in February.
Import prices increased 3.6 percent in the 12 months through March, the biggest gain since April 2017, after advancing 3.4 percent in February. Prices for imported petroleum decreased 1.3 percent in March after falling 0.8 percent in February.
Excluding petroleum, import prices gained 0.1 percent in March after climbing 0.4 percent in the prior month. These prices have risen sharply this year, reflecting the dollar’s depreciation against the currencies of the United States’ main trading partners.
Import prices excluding petroleum rose 2.1 percent in the 12 months through March. The cost of imported food increased 0.6 percent in March, while prices for imported capital goods gained 0.2 percent.
There were also increases in prices of imported base metals, which economists attributed to pre-buying ahead of the steel and aluminum tariffs which came into effect in late March. The price of goods imported from China edged up 0.1 percent in March, rising for a second straight month. Prices for imports from China increased 0.2 percent in the 12 months through March.