Dow climbs 400 points as it seeks to exit 8-week slump

Stocks rose on Thursday as Wall Street tried to rebound after a long string of weekly declines.

The Dow gained 606 points, or 1.9%. The S&P 500 climbed 2.2%. The tech-heavy Nasdaq Composite gained 3%, helped by a rise in Dollar Tree shares, and was the best performer after trailing the other averages earlier in the day.

The Dow Jones has fallen over the past eight weeks, while the S&P 500 and Nasdaq are on seven-week losing streaks. The market seems to have regained its footing somewhat this week, however, as investors hope to see a spike in inflation and look for value at these levels. The Dow Jones has posted gains over the past four sessions.

The Dow and S&P 500 are up 4.6% and 4.3%, respectively, for the week. The Nasdaq is up 3.8%.

Some remain wary of the rally as equities have been on a persistent downward trend since the start of the year, despite the relief rallies that have spread throughout.

“We view this week’s rally in equity markets as technical in nature and not as a change in the overall trend,” Zachary Hill, head of portfolio strategy at Horizon Investments, told CNBC. “It is too early to shift the focus from inflation to growth.”

“Tightening financial conditions that suppress demand in the real economy remains the channel through which the Fed hopes to calm inflation,” he added. “Until that changes, rallies like the ones we’re seeing in equity markets this week, while somewhat expected after nearly two months of relentless declines, are likely to be short-lived.”

Stocks rose after strong profits in the retail sector boosted investor sentiment, which was hurt by disappointing results from big-box retailers last week. Macy’s shares jumped 15% after the company raised its 2022 earnings outlook, and Williams-Sonoma rose 12% after beating estimates on top and bottom earnings.

Discount retailer Dollar Tree jumped 17% after posting a beating in profits and helped lift the Nasdaq. Dollar General also posted strong earnings, adding 12% to its shares. The SPDR S&P Retail ETF gained 4%. Investors eagerly await Costco’s quarterly results, which it will release after the bell.

Shares of chipmaker Nvidia rebounded after falling on weaker-than-expected second-quarter guidance and a warning of slowing hiring. Shares reversed and climbed 4% after a slew of analysts reiterated their buy ratings on the stock and highlighted momentum in the company’s data center business.

Although first-quarter earnings for the market as a whole were broadly in line with historical trends, there were dramatic setbacks for some major stocks after earnings reports as investors looked for the impact of inflation and slowing economic growth.

“If there’s a reason to sell, they embrace it,” said Jeremy Gonsalves, country director of portfolio management at BNY Mellon Wealth Management.

Elsewhere, shares of Twitter jumped more than 5% after Elon Musk increased his commitment in his takeover bid to $33.5 billion, which analysts said indicates new seriousness and a increased likelihood that he will close the deal.

Chipmaker Broadcom has announced plans to buy cloud computing company VMware in a $61 billion deal, which would be one of the largest technology acquisitions of all time. Broadcom shares gained more than 1% and VMWare edged higher.

The financial sector was up about 2%. Bank stocks were higher across the board, with Wells Fargo and Morgan Stanley each gaining about 3% and Bank of America and Goldman Sachs gaining more than 2%.

In contrast, Snowflake software stock fell 12.5% ​​after the company’s operating margin forecast came in narrower than expected.

First-quarter gross domestic product fell at an annual rate of 1.5%, worse than the Dow Jones estimate of 1.3% and a depreciation from the 1.4% originally reported, the department reported Thursday. Trade.

Initial jobless claims for the week ending May 14 totaled 218,000, up from the previous period and slightly above the estimate of 215,000.

CNBC’s Jeff Cox contributed reporting.

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