Stocks pared early gains with the Dow Jones Industrial Average giving up a portion of an early 195-point advance as China, jobless claims and President Donald Trump’s social media attack weighed.
At about 1 p.m. ET in New York, the Nasdaq and the S&P 500 both rose about 1%. The Dow Jones industrials gained 0.7% in the stock market today. Small caps tracked by the Russell 2000 edged 0.2% lower. Volume was lower on both major exchanges vs. the same time Wednesday.
Covid-19 continues to take its toll. The Labor Department reported 2.123 million new initial jobless claims for the week ended May 23. That topped economists’ forecast for 2.1 million, In the prior week, claims rose to a revised figure of 2.336 million from 2.438 million. First-quarter gross domestic product fell 5% in the U.S. vs. initial estimates for a 4.8% contraction, marking the biggest drop since the 2008 financial crisis.
Also early Thursday, China approved a new security law for Hong Kong, further increasing tensions between the U.S. and China.
Meantime, President Trump is expected to take aim at social media companies by issuing an executive order Thursday urging tightened oversight over content posted by users on their online platforms. He tweeted: “This will be a Big Day for Social Media and FAIRNESS!”
Specifically, he was upset by Twitter’s decision this week to mark tweets it considers misleading with blue fact-checking links.
Coronavirus Rally Continues
A recent resurgence in tech stocks had lifted the Nasdaq to a 5% year-to-date gain through Wednesday’s close. The S&P 500 is down 6% year to date and the Dow is off 10%. Despite a recent rebound, the Russell 2000 remains 14% underwater.
The stock market has been in a confirmed uptrend since an April 2 follow-through in the S&P 500. Heading into Wednesday, the Nasdaq was trading around 5% below its Feb. 19 high. Read The Big Picture for a detailed analysis on daily market action.
Worldwide coronavirus cases have topped 5.8 million, with nearly 360,000 deaths, according to Worldometer data tracker. In the U.S., confirmed cases are close to 1.75 million with the death toll surpassing 102,000. Though the counts continue to rise, daily cases and deaths have held below their respective peaks from April 24 and April 23.
All 50 states have now started to reopen their economies.
Merck In Race For Covid-19 Cure
On the Dow Jones index, Merck (MRK), Boeing (BA) and Procter & Gamble (PG) led with gains of more than 2% each.
Merck gapped up above its 50-day moving average as it gets closer to an 84.77 buy point of a cup with handle, according to MarketSmith chart analysis. Shares are about 6% from the entry.
The drug giant on Tuesday said it’s buying Austrian biotech Themis, which is working on a coronavirus vaccine. Merck is also teaming up with IAVI to test a potential Covid-19 vaccine and partnering with Ridgeback Bio to develop an antiviral coronavirus treatment.
Boeing, on track to extend its win streak to three days, restarted production on the 737 Max Jet. The stock regained its 50-day line last week for the first time since February. The jet maker on Wednesday announced 7,000 involuntary layoffs. Shares remains 60% below their 52-week highs.
American Express (AXP), Goldman Sachs (GS) and Chevron (CVX), the biggest blue-chip losers, gave up more than 2% apiece.
Twitter Falls On Trump Threat
Medical, software and utility stocks led the upside among IBD’s 197 industry groups. But department stores, banks and transportation stocks lagged.
Among ETFs, SPDR S&P Regional Banking (KRE) and SPDR S&P Bank (KBE) gave up more than 2% each, while Utilities Select Sector SPDR Fund (XLU) and Health Care Select Sector SPDR Fund (XLV) rose a respective 2.5% and 2%.
Twitter (TWTR), which sparked Trump’s attack, fell 3% in heavy trade. The stock is back below its downward-sloping 200-day line after retaking it on Tuesday. Twitter is trading nearly 30% off its 52-week high. A 75 Composite Rating from IBD Stock Checkup puts it 15th in the 64-stock internet content group.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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