Stocks were mixed Thursday morning amid a deluge of new economic data, much of which was still consistent with a contraction but at least signaled some stabilization after an initial slump in activity.
A new report this morning showed new unemployment claims totaled a slightly greater than expected 2.123 million last week, though continuing claims for the prior week pulled back from a record high and fell for the first time during the pandemic. Meanwhile, first-quarter gross domestic product (GDP) was downwardly revised to show a 5.0% annualized decline, from the 4.8% previously reported.
So far this week, investors have been weighing signs of stabilizing US economic activity after last month's deep downturn, along with hopes of a vaccine or treatment, against concerns that relations with China were set to become increasingly strained. China approved a draft decision for new national security legislation that would impose on freedoms in Hong Kong, in a move that would encroach on the autonomy of the region and jeopardize its special trade status with the U.S.
Still, the net effect of the myriad developments was risk-on for equities at least through Wednesday's close, sending the S&P 500 to close above 3,000 for the first time since March 5 and the Dow to a close of more than 25,000 for the first time since March 10.
Some of the stocks that led the S&P 500's more than 35% bounce from its March 23 lows, however, lagged in recent sessions. The tech-heavy Nasdaq underperformed against the other major equity indices again on Thursday, and the Communication Services and Information Technology sectors lagged in the S&P 500. President Donald Trump said earlier he planned to sign an executive order against social media companies, after Twitter added its first fact-checking labels to Trump's tweets.
That rotation from high-growth tech to value names also came alongside states reopening their economies and helping catalyze an uptick in activity, bringing investors back into a broader basket of equities.
"I think we can say at least now looking backwards, April was the economic bottom," David Nelson, chief strategist at Belpointe Asset Management, told Yahoo Finance's On the Move Wednesday afternoon. "We were at a virtual standstill. Anything has to be better than where we were. And as you get economic activity, there's this natural gravitation to what I would call deeper cyclical names, and that points you to industrials, financials and some of the others."
Still, the historic depths of the downturn in April and early May as underscored in recent economic reports highlighted the ongoing process of getting activity back to pre-virus levels. And the coronavirus case count and death toll from the pandemic continued to climb, albeit at decelerating paces, with the U.S. Covid-19 death toll topping 100,000.
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