The major stock market indexes finished strong Thursday, holding onto early gains. Investors turned bullish after rising jobless claims suggested that Fed tactics are slowing the labor market. That would allow for less-aggressive rate hikes.
Investors have been dumping their losing stocks, taking advantage of tax-loss selling ahead of Friday's 2022 finale. The light at the end of this tunnel added to market strength, with sidelined cash set to redeploy in 2023.
The S&P 500 climbed 1.8% and the Nasdaq spiked 2.6%. The Dow Jones Industrial Average gained 1.1%, up 345 points. The Russell 2000 small-cap index also saw strong gains, rising 2.5%.
The Dow reclaimed its 50-day moving average after breaking below that level Wednesday. The S&P 500 and Nasdaq remain below their 50-day lines.
The tech-heavy Nasdaq 100-tracking Invesco QQQ trust ETF gained 2.4%.
NYSE volume was lower while Nasdaq volume rose vs. the same time on Wednesday in preliminary numbers.
Crude oil pulled back 0.4% to $78.62 per barrel. The Energy Select Sector SPDR ETF rallied 1.1%. Natural gas retreated 2.8% and is trading below $5 per million British thermal units.
Bitcoin futures added 0.1% to $16,580. The 10-year Treasury note yield shed five basis points to 3.83%.
European stock markets closed higher, with the German DAX adding 1.1% and the Paris CAC 40 gaining 1%. The London FTSE 100 rose 0.2%.
Odds for a 25-basis-point hike by the U.S. Federal Reserve at the February meeting stand at 72.8%. That would take the fed funds rate to the 4.5%-4.75% range. Meanwhile, 27.2% are looking for a 50-basis-point hike, according to the CME Group FedWatch Tool.
Initial jobless claims for the week ending Dec. 24 came in at 225,000 vs. the 222,000 expected, a sign that the job market may be cooling off. This marked an increase compared with 216,000 the prior week and was the highest level since February. The uptick may indicate that interest rate hikes are starting to slow the economy.
Walt Disney: Today's Dow Jones Leader
Media giant Walt Disney led the Dow Jones, rallying 3.6% after two down days. It was the Dow's biggest loser Wednesday, when it fell 2.6%. DIS stock has lost over 43% year to date and is ending its worst year since 1974.
Egg producer Cal-Maine Foods dropped 14.5% in Thursday's stock market after reporting a miss on fiscal Q1 2023 EPS estimates. It beat on sales.
The company warned the avian flu outbreak will continue to put downward pressure on the worldwide egg supply. Fortunately, they had no positive tests of avian flu at their facilities as of Wednesday.
The big sell-off triggered the 7%-8% sell rule from the 62.74 buy point of a base. Shares are now below the 50-day moving average, another sell signal.
Offshore energy driller Tidewater rose 5.3% and is building the right side of a cup base with a 36.60 buy point. The relative strength line is at a new high, as indicated by the blue dot on the MarketSmith chart.
Southwest Airlines reclaimed 3.7% after this week's sell-off, following thousands of flight cancellations during the holiday weekend. Those disruptions have extended through this week.
New Rally Starts: 7 Stocks Near Buy Points; What To Do
IBD 50 Stock Market Movers: Homebuilder Stock Rallies
Homebuilder Meritage Homes rose 3.3% in light volume and continues its upward trend since reporting better-than-expected Q3 EPS on Oct. 26. The stock bounced off its 21-day exponential moving average Thursday. The 88 Relative Strength Rating has strengthened from 56 four weeks ago.
Payment processor Shift4 popped 5.6% after Piper Sandler posted an overweight rating with a price target of 69. Shares are extended from the 5% buy zone of a consolidating base.
Hibbett gained 4.9% and is extended from the 5% buy zone of a cup-with-handle base. HIBB is ranked second out of 14 stocks in the Retail-Leisure Products industry group. The athletic retailer offers brand names such as Jordan, Nike, Adidas and Under Armour. Nike rose 2.4% and Under Armour added 3.6% on Thursday.
Crocs was up 2.4% in light volume, adding to its steady uptrend since reporting positive Q3 earnings on Nov. 3. The footwear stock is extended from the 20%-25% profit-taking zone of a base with an 83.74 buy point.
