The S&P 500 index rose for the sixth straight day to close at new record Thursday, while the Nasdaq Composite was up for nine consecutive days to also finish at a fresh record, though the Dow broke a five day winning streak to close slightly lower.
Investors greeted a Federal Reserve decision on Wednesday to taper its bond purchases and be patient on raising interest rates with relief and data showed the economy’s recovery from the pandemic intact.
The Dow Jones Industrial Average
closed down 33.35 points or 0.09% to 36124.23
The S&P 500
rose 19.49 points or 0.42% today to 4680.06 a sixth straight record close.
The Nasdaq Composite
was up 128.72 points or 0.81% today to 15940.31, another record for the tech-heavy index.
On Wednesday, the Dow, S&P 500 and Nasdaq Composite ended at records. The S&P 500 extended its gains for 2021 to 24%.
What drove markets
The implications of the Fed’s decision Wednesday to begin scaling back its bond purchase program were still being discussed by analysts Thursday. The central bank said it would start reducing purchases by $15 billion per month, after what it called substantial further progress on inflation and labor market goals.
“Broadly our view on interest rate policy is that the Fed will remain patient, leaving nine months between the end of QE and any increase in rates, with our expectation of the first hike being Q1 2023. However, we would acknowledge that the risks are skewed to an earlier move,” said Ryan Djajasaputra, an economist in London for Investec.
Interest rates appeared to be the biggest issue for the Dow as the bond market created a big enough reaction in a small corner of the index to bring the whole thing tumbling down.
“Weakness in financials after the 10 year yield backed up today is what hurt the Dow,” said Tom Hearden, Senior Trader at Skylands Capital.
Hearden pointed to down days from Goldman Sachs
and Travelers Companies Inc.
as prime drivers of the Dow’s gentle Thursday swoon that still kept it over the 36,000 point level.
The focus is shifting to the U.S. employment report for October due for release from the Labor Department on Friday, as Fed Chair Jerome Powell linked the possibility of starting the interest rate-hike cycle to a jobs-market recovery. The Labor Department on Thursday said jobless benefit claims dropped by 14,000 to 269,000 in the seven days ended Oct. 30, a new pandemic low.
It may take some big surprises, however, for jobs reports to move the needle on Fed expectations, said Matt Weller, global head of research at Forex.com and City Index, in a note.
“The next several jobs reports are unlikely to influence monetary policy meaningfully unless they’re dramatically better or worse than expected for a sustained period,” he wrote. “That said, there may still be implications for fiscal policy as a major stimulus program winds its way through Congress as fears of inflation rise for the first time in decades.”
Unit-labor costs jumped 8.3% in the period from July through September, the government said Thursday. The rising costs as productivity plunged, with companies struggling to secure enough supplies on time to keep production going at full tilt.
Meanwhile, the Bank of England defied expectations for a rate increase, standing pat in its Thursday meeting.
Which companies were in focus?
Shares of ViacomCBS
gave back early gains after the media and entertainment company reported third-quarter profit that matched expectations and revenue that beat, amid strength in its streaming and TV entertainment businesses. The stock closed down 4.4%.
reported strong profit growth for the third quarter late Wednesday but shares of the connected-television company fell 7.7% after the company forecast a weaker-than-expected holiday quarter due to the impacts of supply-chain disruptions.
Shares of MGM Resorts International Inc.
fell 2.7% after the casino operator reported a surprise third-quarter profit and said it would sell its operations of The Mirage.
shares surged 12% on growing speculation that the company will benefit from the Metaverse fad gripping big tech. The move put Nvidia’s market cap above $700 billion for the first time, according to Dow Jones Market Data.
What did other markets do?
The yield on the 10-year Treasury note
fell 7.9 basis points to 1.53%. Yields and debt prices move in opposite directions.
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, rose 0.5%.