Major US stock indices rose Thursday as energy and travel stocks rallied ahead of a major jobs report.
The Dow Jones Industrial Average rose 204 points, or 0.6%. The S&P 500 was up 0.4% while the Nasdaq Composite was up 0.6%. Movement in the stocks came after a mostly lower regular session on Wednesday that saw the Dow drop 300 points.
Initial weekly jobless claims reached 385,000 on Thursday, which was in line with expectations. The claims data were the last readings before the key job report for July, which will be published on Friday morning. There is a wide range of estimates by economists of what the report will show, and some employment growth metrics have disappointed despite a high proportion of reported job openings.
The labor market report is expected to be an important data point for the Federal Reserve in considering when to tighten monetary policy.
“This is going to be the big event for this week as it has many direct implications for Fed action. Tomorrow’s reading and September’s reading will be crucial for policymakers to decide how to reduce and when and how fast this action will be, ”said Angelo Kourkafas, investment strategist at Edward Jones.
The results of an ADP private payroll released Wednesday showed 330,000 jobs growth for July, well below the consensus estimate of 653,000. Kourkafas said the ADP failure showed that Friday’s report was at downside risk. Economists expect the numbers to add 845,000 extra non-farm jobs in the US in July, which Dow Jones estimates is roughly compared to the previous month.
Travel stocks, including airlines, rebounded Thursday after struggling with the spread of the Delta variant of Covid 19 last week. American Airlines was up more than 6%, while casino stock Caesars Entertainment was up more than 4%.
“It’s nice to have a day where we can see a recovery of reopening and travel. They’ll be nailed in all directions as of Sunday, ”said Stephanie Link, chief investment strategist at Hightower Advisors.
Energy stocks also performed well as the price of oil moved back towards $ 70 a barrel. Chevron’s shares rose 1.8%, making it one of the top stocks in the Dow for the session.
The yield on 10-year government bonds rose slightly to 1.2% on Thursday. The yield briefly fell below 1.13% on Wednesday before recovering in late morning trade.
Roku’s shares fell more than 4% after the company released quarterly results. Etsy fell 6% after the company released a forecast for the current quarter suggesting the pandemic-sparked trade boom may be coming to an end.
However, the earnings season was strong overall. Goldman Sachs raised its year-end target for the S&P 500 to 4,700, up 7% in part due to the improving earnings outlook.
Robinhood’s shares rose 50% during Wednesday’s regular trading and continued a volatile rise after last week’s sluggish IPO. However, following the announcement that some shareholders will sell more than 97 million shares, the stock flipped on Thursday.