S&P 500 jumps 2.3% for best day since 2022—turns off brutal start to week

US stocks rallied Thursday in Wall Street’s latest sharp reversal after a better-than-expected jobless report eased concerns about economic stagnation.

The S&P 500 jumped 2.3% in its best day since 2022 and stripped all but 0.5% of its losses from a brutal start to the week. The Dow Jones Industrial Average rose 683 points, or 1.8%, and the Nasdaq composite rose 2.9% as Nvidia and other Big Tech stocks helped lead the way.

Treasury yields also rose in the bond market to show that investors are feeling less worried about the economy after a report showed that fewer US workers filed for unemployment benefits last week. The number was better than economists had expected.

It was last week that worse-than-expected data on jobless claims helped fuel worries that the Federal Reserve would keep interest rates at record-high levels to slow the economy for too long to fight inflation. That helped roil markets around the world, with the Bank of Japan’s rate hike sending shockwaves around the world by spurring trades that are a favorite among some hedge funds.

The worst of it, at least so far, is that the S&P 500 is down about 10% from its all-time high last month. Such declines happen regularly on Wall Street, and a 10% “correction” occurs about every year or two. After Thursday’s jump, the index is back within 6% of its record high.

What makes this decline even more frightening is how quickly it happened. The measure of how much investors are paying to protect themselves against a future decline in the S&P 500 briefly rose to the highest level since the 2020 COVID crash.

Still, the market volatility looks more like a “position-driven crash” caused by many investors piling into the same projects and exiting them together, rather than the start of a long-term bear market caused by a recession, according to strategists BNP Paribas.

They say it looks more like the “flash crash” of 2010 than the global financial crisis of 2008 or the recession of 2020 caused by this pandemic.

Yes, markets have moved quickly in the past week regardless of long-term forecasts.

“Today’s weak claims data may ease some of the concerns raised by last week’s soft jobs report,” said Chris Larkin, managing director, trading and investment, at Morgan Stanley’s E-Trade. “But with inflation data due out next week and the stock market still reeling from the biggest pullback of the year, it’s unclear how much this will move the sentiment needle.”

Meanwhile, major US companies continue to deliver spring earnings reports that are better than analysts’ expectations.

Eli Lilly jumped 9.5% to help lead the market after delivering stronger profit and revenue than Wall Street forecast. Sales of its diabetes treatment Mounjaro and its weight-loss partner Zepbound are growing, and the company has raised its financial forecast for the year.

Big Tech stocks also rose to recoup some of their biggest losses from last month.

After a handful of them nearly drove the S&P 500 to multiple all-time highs this year, the group known as the “Magnificent Seven” lost momentum last month amid criticism that their valuations have skyrocketed amid investor controversy over intelligence technology. .

How these few stocks perform has more impact on the S&P 500 and other indexes because they are the most important companies in the market. Nvidia, which has become the poster child for AI trading, rose 6.1% to trim its week-to-date losses to 2.1%, and was the strongest one-day move to the top of the S&P 500.

Apple’s 1.7% and Meta Platforms’ 4.2% gains were also big movers, along with Eli Lilly.

They helped offset an 11.3% decline in McKesson, which topped analysts’ expectations for profit in the latest quarter but fell short on revenue. It said growth slowed in its medical surgery business.

Bumble, the Texas-based dating app, lost more than a quarter of its value, 29.2%, after its third-quarter revenue forecast came in well below Wall Street.

All told, the S&P 500 rallied 119.81 points to 5,319.31. The Dow gained 683.04 to 39,446.49, while the Nasdaq composite rose 464.22 to 16,660.02.

In the bond market, the yield on the 10-year Treasury rose to 3.99% from 3.95% late Wednesday.

In stock markets abroad, indices were mixed across Asia and Europe. In Japan, which has been home to some of the worst moves in global markets, the Nikkei 225 fell 0.7%. That looked like a rarity following its volatility down 12.4% and up 10.2% to start the week.

– Stan Choe, Associated Press business writer

Yuri Kageyama and Matt Ott contributed to this report.