By Caroline Valetkevitch
Stock Market Soars as Jobless Claims Drop, Nasdaq and S&P 500 Surge Over 2%
New York (Multibagger) - U.S. stocks surged on Thursday, with the Nasdaq and S&P 500 each ending more than 2% higher after jobless claims fell more than expected in the latest week, easing concerns about a weakening labor market.
All major S&P 500 sectors saw gains, especially in technology and communication services. Small-cap stocks also rallied, with the index climbing 2.4%.
Among the S&P 500's top performers, shares of Eli Lilly (NYSE:) soared 9.5% after the drugmaker raised its annual profit forecast, and sales of its popular weight-loss drug Zepbound crossed $1 billion for the first time in a quarter.
Data revealed that the number of new unemployment benefit applications last week dropped more than anticipated.
"This data point was significant for the week, adding to its importance," said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest in Elmhurst, Illinois.
"Our analysis indicates that the labor market remains stable... Recession concerns at this point may be exaggerated."
Stocks had experienced a sharp decline after last week's July U.S. jobs report raised fears of a potential recession. Traders also mentioned the unwinding of carry trade positions, where investors borrow money from low-interest economies to invest in high-yielding assets elsewhere.
The Dow Jones Industrial Average rose 683.04 points, or 1.76%, to 39,446.49, the S&P 500 gained 119.81 points, or 2.30%, to 5,319.31, and the Nasdaq added 464.22 points, or 2.87%, to 16,660.02.
The Cboe Volatility index, Wall Street's fear gauge, decreased on Thursday.
"Volatility takes time to settle once it starts," said David Lundgren, chief market strategist and portfolio manager at Little Harbor Advisors in Marblehead, Massachusetts.
"Although we're seeing significant gains now, it doesn't necessarily mean the market has hit its lows or will continue to rise. However, looking ahead three to six months, the likelihood of above-average returns is high."
The second-quarter earnings season is nearing its end, but investors are closely monitoring final results after some disappointing reports earlier in the period.
Shares of Under Armour (NYSE:) surged 19.2% after the sports apparel maker reported a surprise first-quarter profit, benefiting from inventory and promotion cuts.
Trading volume on U.S. exchanges was 11.98 billion shares, compared to the 12.60 billion average over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a ratio of 3.59-to-1, while on Nasdaq, a ratio of 2.76-to-1 favored advancers.
The S&P 500 recorded 7 new 52-week highs and 4 new lows; the Nasdaq Composite saw 32 new highs and 183 new lows.