Wall Street Up as Investors Look Beyond Q1 GDP Drop, Tech Stocks Jump 3%
NEW YORK (Sputnik) - US stocks rallied for their first weekly gain since the start of April, as investors looked beyond a quarterly GDP decline to focus instead on a sterling job market that looked poised to lead the economy to a good place.
Wall Street’s three major stock indexes - the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite - closed Thursday’s trade up by an average of 2.5%.
The technology-heavy Nasdaq led gains by rising just over 3% for its biggest advance in six weeks.
Just two days prior, Nasdaq - which houses the biggest technology names of the world, including Facebook, Amazon, Apple, Netflix and Google - lost almost 4% in its largest one-day slump in two years that dated back to the early days of the coronavirus pandemic.
Thursday’s rally in stocks came despite the Commerce Department reporting a negative growth of 1.4% in gross domestic product (GDP) between January and March. It was the first negative US GDP growth since a 31.2% decline between April and June 2020, which marked the height of the pandemic. The retreat in the past three months came after a spike in new coronavirus cases and fewer pandemic relief payments by the government during the period.
The Q1 GDP data landed simultaneously with a report showing US jobless claims at five-decade lows last week, proving the labor market a juggernaut of the economy.
"Everyone one on Wall Street knew to expect enhanced volatility in the first quarter given the war in Ukraine, the impact of the omicron wave, and as the economy grappled with inflation," said Ed Moya, analyst at online trading platform OANDA. "Jobless claims also remained very low, which suggests the labor market is still very hot."
US Treasury Secretary Janet Yellen noted in a speech on Thursday that of all tools policy-makers had now for fighting a recession, the labor market was probably the most resilient, with employment of Americans having reached record highs from all-time lows hit just two years ago.
"It is necessary to preserve attachment to the labor force in an economic downturn," Yellen said. "While we need more work to best target our policy response, in recent years we’ve worked with multiple new policy levers to keep workers on payroll and off on long-term unemployment."
Joblessness among Americans reached a record high of 14.8% in April 2020, with the loss of some 20 million jobs in the aftermath of the coronavirus breakout. Employment has, however, been stellar over the past year, with the jobless rate moving down to 3.6% in March. A jobless rate of 4.0% or below is regarded by the Federal Reserve as "maximum employment".
In Thursday’s stocks trading, the S&P 500 — which groups the top 500 US stocks — finished up 104 points, or 2.5%, at 4,288.
The Dow Jones Industrial Average, which lists travel, aviation and cross-industry value stocks, settled up 614 points, or 1.9%, at 33,916.
Nasdaq closed up 383 points, or 3.1%, at 12,871.