U.S. stocks closed mostly higher Thursday, with a rally in technology stocks driving the Nasdaq to its latest in a series of recent records.
A flurry of stronger-than-expected economic data also lent support to stocks, while investors were mostly supportive about the European Central Bank detailing a timeline for its bond-buying program, as well as its interest-rate policy.
What did markets do?
The Dow Jones Industrial Average DJIA, -0.10% fell 25.89 points, or 0.1%, to 25,175.31. Financials pressured the index, with JPMorgan Chase & Co. JPM, +0.02% the biggest drag, falling 1.8%.
The S&P 500 SPX, +0.25% advanced 6.86 points, or 0.3%, to 2,782.49, with a 0.9% decline in shares of financials limiting gains from technology stocks, which rose 0.6%. Consumer-discretionary stocks rose 1%.
The Nasdaq Composite Index COMP, +0.85% gained 65.34 points, or 0.9%, to 7,761.04, setting an intraday record and closing at a record.
The Cboe Volatility Index VIX, -6.34% fell 6.3%, the biggest one-day percentage decline for the so-called “fear index” since June 1. The VIX, at 12.11, is significantly below its long-term average between 19 and 20.
What drove the market?
Central bank activity was a primary driver of the day. Meeting just a day after the Fed lifted interest rates for the second time this year, the ECB was in the spotlight Thursday after it left interest rates unchanged and laid out plans to taper its program of monthly bond purchases later this year. The central bank is aiming to bring them to a halt by the end of 2018.
Aside from the central banks, trade worries continued to be on traders’ minds. President Donald Trump’s administration is preparing to announce tariffs on tens of billions of dollars’ worth of Chinese goods as early as Friday, a move that is feared to trigger retaliatory action by China.
What was on the economic calendar?
Retail sales nationwide jumped by 0.8% last month, twice as high as the MarketWatch forecast. Separately, the import price index in May rose by 0.6% for the second straight month, adding to mounting evidence of higher inflation. Business inventories in the U.S. rose 0.3% in May to rebound from a decline in the prior month.
In the latest read on the labor market, new jobless claims dropped by 4,000 to 218,000 in the latest week. The more stable monthly average of new claims dipped by 1,250 to 224,250.
The International Monetary Fund said that the U.S. economic outlook was strong, but identified a number of risks, including higher public debt, a greater risk of an inflation surprise, international spillover risks, the risk of future recession and increased global imbalances.
What were analysts saying?
“The ECB did a pretty good job telegraphing what it’s planning to do. [ECB President Mario] Draghi is following Ben Bernanke’s playbook, with a zero-interest-rate policy, bond buying, and then eventually shrinking the central bank’s balance sheet. When we did all that, our market continued to move higher, which gives investors confidence that the blueprint they’re following is the correct one,” said Phil Orlando, chief equity market strategist at Federated Investors.
“Also, the retail-sales number was phenomenal. Given how important that is to the economy, it suggests that future GDP growth should be strong.”
Which stocks were in focus?
Shares of Tailored Brands Inc. TLRD, +0.04% tanked 22% after the retailer late Wednesday reported comparable sales below analyst forecasts.
Shares of Royal Caribbean Cruises Ltd. RCL, +5.11% rose 5.1% after it said it was buying a 66.7% stake in privately-owned Silversea Cruises for $1 billion.
21st Century Fox Inc. FOXA, +2.11% added 2.1% after Comcast Corp. CMCSA, +0.24% late Wednesday offered to buy a big chunk of Fox’s entertainment and international assets for $65 billion. That offer was about 19% higher than Walt Disney Co.’s DIS, +2.30% offer. Disney shares rose 2.3% higher, while Comcast closed up 4.6%.
Oracle Corp. ORCL, -0.04% shares sank 4.9% after J.P. Morgan analysts downgraded the enterprise software company, citing signs that spending on the company’s products would decline.
Nike Inc. NKE, +0.31% rose 0.8% after Wedbush analyst Christopher Svezia raised his price target on the stock to $82 from $75.
What did other markets do?
Stocks in Asia closed lower across the board as traders there reacted to Wednesday’s Fed decision. The People’s Bank of China decided not to follow the Fed in raising interest rates, defying expectations that the Chinese policy makers would follow their usual pattern and respond with small hikes to Fed moves.
European stocks jumped after the ECB decision, with the Stoxx Europe 600 index SXXP, +1.23% up 1.4%.
The dollar rallied against most other major currencies, sending the ICE U.S. Dollar Index DXY, +1.42% 1.1% higher to 94.744. The euro EURUSD, +0.1297% slid 1.8% against the buck.
Crude-oil prices CLN8, +0.15% were slightly higher, while gold GCQ8, -0.17% gained 0.4%.
U.S. yields retreated, with the 10-year Treasury rate TMUBMUSD10Y, -0.99% down 3.6 basis points at 2.93%.
