Technology companies powered a broad rally for U.S. stocks Thursday, snapping the market’s two-day losing streak.
Technology companies powered a broad rally for U.S. stocks Thursday, snapping the market’s two-day losing streak.
Apple and chipmakers led the wave of buying, helping to drive the technology sector to an overall gain of 2.5 percent. The sector is up 21.1 percent this year so far, well ahead of the S&P 500’s 10 other sectors.
Retailers and industrial companies also notched solid gains, which easily offset losses in financial stocks.
Levi Strauss soared as the storied jeans maker went public for the second time.
The latest gains erased the market’s modest losses from a day earlier, when the Federal Reserve said it expected the U.S. economy to slow down and that it no longer expected to raise interest rates this year.
While investors appeared to be circumspect about the central bank’s economic outlook, any concerns seemed to take a backseat Thursday to the likelihood that the Fed will hold off on raising interest rates.
“Overall, stocks are rallying because interest rates have gone down and we know that the Fed is going to continue to be the market’s friend,” said Karyn Cavanaugh, senior markets strategist at Voya Investment Management. “There’s absolutely no reason not to be in stocks when you have an incredibly dovish Fed that is going to support asset prices.”
The S&P 500 index rose 30.65 points, or 1.1 percent, to 2,854.88. The Dow Jones Industrial Average gained 216.84 points, or 0.8 percent, to 25,962.51
The Nasdaq composite, which his heavily weighted with technology stocks, climbed 109.99 points, or 1.4 percent, to 7,838.96. The Russell 2000 index of smaller-company stocks picked up 19.25 points, or 1.2 percent, to 1,562.41.
Major European stock indexes finished mostly lower.
Despite a couple of downbeat days, the S&P 500 is closing in on its second straight weekly gain. The benchmark index is up 13.9 percent so far in 2019. That’s better than the full-year gains for the benchmark index in four of the past five years.
Thursday’s rally came as investors weighed the latest batch of company earnings reports and some key analyst stock upgrades.
Apple climbed 3.7 percent after analysts at Needham & Co. upgraded the technology giant’s stock to a strong “Buy,” saying the company’s new services initiatives could attract new users. The company has made several product announcements this week and has an event scheduled next Monday where presumably more announcements will be made.
Chipmakers gained after Micron Technology issued a strong outlook for the year. The company jumped 9.6 percent after the its forecasts for the fourth quarter topped Wall Street’s estimates and said it expects the memory chip market to recover in the second half of the year.
The upbeat forecast helped lift some of its peers. Nvidia rose 5.5 percent and Advanced Micro Devices climbed 8.5 percent.
Olive Garden owner Darden Restaurants gained 6.9 percent after it reported earnings that were far better than analysts were expecting. Darden also raised its own profit forecast for the year.
Conagra Brands vaulted 12.8 percent after the packaged food company beat third-quarter profit forecasts on higher prices for some of its products.
Levi Strauss soared after its IPO hit the market for the second time the brand’s 166-year history. The company previously went public in 1971, but the namesake founder’s descendants took it private again in 1985.
The stock jumped 31.8 percent Thursday from its offering price of $17.
The strong demand for shares in Levi, which owns the Dockers and Denizen brands, is a good sign for other companies eyeing an IPO this year, said Erik Davidson, chief investment officer at Wells Fargo Private Bank.
“It does bode well, particularly since it’s an IPO for a non-tech firm, it probably speaks well of the overall market conditions and investor sentiment,” he said.
Traders were not as keen on rival clothing brand Guess. The company gave a disappointing fourth-quarter report and forecast, which sent its shares 12.5 percent lower.
Drugmaker Biogen also slumped on news that the company stopped a trial for an Alzheimer’s drug. The biotechnology giant and its partner determined that the drug would likely be ineffective.
The company’s shares plunged 29.2 percent as it lost more than $17 billion in market value.
Financial stocks finished broadly lower for the second straight day, hurt by the prospects for lower interest rates. Fifth Third Bankcorp led the slide, dropping 3.7 percent.
“Financials are lagging because interest rates are down, so the yield curve is not their friend right now,” Cavanaugh said.
Banks slumped Wednesday after the Fed’s outlook for interest rates this year triggered one of the biggest slides for Treasury yields in months.
Bond prices held steady Thursday. The yield on the 10-year Treasury note was unchanged at 2.53 percent.
Energy futures prices finished mixed. Benchmark U.S. crude slid 0.4 percent to settle at $59.98 a barrel. Brent crude fell 0.9 percent to close at $67.86 a barrel.
Wholesale gasoline added 0.2 percent to $1.92 a gallon, heating oil dropped 1 percent to $1.99 a gallon and natural gas was little changed at $2.82 per 1,000 cubic feet.
The dollar rose to 110.79 yen from 110.61 Japanese yen on Wednesday. The euro weakened to $1.1354 from $1.1446.
Gold gained 0.4 percent to $1,307.30 an ounce, silver added 0.8 percent to $15.44 an ounce and copper gave up 0.5 percent to $2.91 a pound.