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S&P 500 rides tech rally higher as Treasury yields stutter on easing inflation

Published 2023-04-13, 02:50 p/m
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By Yasin Ebrahim

Investing.com -- The S&P 500 jumped Thursday, as big tech climbed as Treasury yields stuttered on data showing cooling inflation and easing labor market tightness that could encourage less aggressive Federal Reserve policy action.

The S&P 500 rose 1.3%, the Dow Jones Industrial Average added 1%, or 350 points, and the Nasdaq rose 2%.

Big tech was led by higher by Alphabet (NASDAQ:GOOGL), up 2%, and Apple (NASDAQ:AAPL), up 3%, as Treasury yields slipped on data showing that wholesale inflation cooled more than expected.

The producer price index for final demand unexpectedly fell 0.5% last month, compared with economists' forecasts for a 0.1% rise. In the 12 months through November, the PPI rose 2.7%, well below the 3% forecast.

As well as easing inflation pressures, there were signs that the hot labor market also supported hopes that Federal Reserve may adopt a less aggressive monetary policy stance. The Fed’s minutes from its March meeting showed the central bank expects the recent banking turmoil to cause a “mild recession” later this year.

The U.S. Department of Labor reported Thursday that initial jobless claims increased by 11,000 to 239,000 in the week ended Apr. 8, compared with forecasts of a 4,000 increase.

On the earnings front, Delta Air Lines (NYSE:DAL) fell about 1% after reporting worse-than-expected quarterly results. The airline, however, forecast record advanced bookings for the crucial summer period.

The bullish outlook from Delta pointing to healthy demand lifted other airlines, with United Airlines Holdings Inc (NASDAQ:UAL) and American Airlines Group (NASDAQ:AAL) also up than more 1%.

Energy was slightly above the flatline as upside was weighed down by failing oil prices on fears that a U.S. recession will curb energy demand.

In other news, Netflix Inc (NASDAQ:NFLX) jumped 4% after Wells Fargo said it was bullish on the stock on expectations that the streaming giant will likely benefit from the rollout of its paid sharing program.

Financials also played a role in the broader market climb as bank stocks racked up gains ahead of the quarterly earnings season, which kicks off in earnest on Friday.

JPMorgan Chase & Co (NYSE:JPM), Citigroup Inc (NYSE:C), and Wells Fargo & Company (NYSE:WFC) will report quarterly results before the opening bell on Wednesday.

"We believe deposit flows will be the front & center topic following the turmoil in the banking sector over the past month," Wedbush said. "We expect loan growth to slow from the strong pace over the prior few quarters as demand cools in light of higher rates and the uncertain economic environment."

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