U.S. equity indices experienced a notable surge following an unexpected increase in the forecast for Q2 economic growth, coupled with a decline in weekly jobless claims, prompting most government bond yields to rise. The S&P 500 index showed a robust climb of 0.9%, reaching 5,644.2 points. Meanwhile, the Nasdaq Composite marked a 1.2% increase, climbing to 17,770.2 points, and the Dow Jones Industrial Average rose by 1.1%, settling at 41,544.5 points by mid-afternoon on Thursday.
Notably, sectors such as industrials, consumer discretionary, and energy led the charge, while the real estate and consumer staples sectors faced declines. In terms of economic developments, U.S. gross domestic product (GDP) growth was adjusted upward to 3% for the second quarter, a revision from the initial estimate of 2.8%.
This result outperformed expectations that suggested no revision according to a Bloomberg compilation of surveys. For context, GDP growth stood at 1.4% in the first quarter of the year. In the job market, initial unemployment claims in the U.S. fell to 231,000 last week, a reduction from a previously revised level of 233,000 from the prior week.
This figure also fell short of the expected projections of 232,000, as noted in a survey by Bloomberg analysts. Additionally, the four-week moving average of jobless claims decreased to 231,500, continuing a trend of three consecutive weeks of decline. Most Treasury yields increased, with the 10-year yield rising by 2.8 basis points to 3.87%.
In conjunction, the two-year yield saw a gain of two basis points, reaching a total of 3.9%. Despite a staggering 3.5% intraday drop in Nvidia shares ($NVDA), which followed a slightly less than stellar quarterly earnings report released late Wednesday, equity indices continued their upward trajectory.
The 'masterpiece performance' reported by Nvidia for fiscal Q2, as characterized by Wedbush Securities, has helped sustain an optimistic outlook on the burgeoning artificial intelligence sector. In corporate news, Best Buy ($BBY) shares surged by an impressive 15%, marking the largest gain on the S&P 500, following the retailer's announcement of elevated adjusted earnings for fiscal Q2 and an upward revision of its fiscal 2025 guidance. Moreover, Cooper ($COO) shares surged by 11% intraday, representing the second-largest increase on the S&P 500, after the company revealed robust fiscal Q3 non-GAAP earnings and revenues.
Cooper also raised its earnings guidance for fiscal 2024, further exhibiting strong performance. In contrast, Dollar General ($DG.US) shares plummeted by 29%, marking the most substantial decline on the S&P 500. This downturn followed the company’s disclosure that its fiscal Q2 results fell short of market expectations while also lowering its forecast for fiscal 2024. On the commodities front, West Texas Intermediate crude oil saw a rise of 2%, settling at $75.99 per barrel. The volatility in stock prices and bond yields, juxtaposed with the unexpected economic developments, underscores the dynamic nature of the current financial landscape.
Investors are keenly observing how these trends will unfold in the coming weeks as companies continue to report their financial performance and economic indicators fluctuate..