Topline
The Dow Jones Industrial Average extended its 2024-best winning streak Thursday, headlining a broader rally catalyzed by a seemingly negative development: The labor market is not as strong as expected.
Thursday’s rally was actually led by real estate stocks, the S&P 500’s worst-performing sector so ... [+]
Key Facts
The Dow, which tracks 30 prominent American companies across industries, rose 330 points to 39,388, its highest close since April 1.
It’s the Dow’s seventh consecutive winning trading session and puts it within just two more days in the green of matching December’s nine-session winning streak.
The broader S&P 500 and tech-heavy Nasdaq indexes notched more modest 0.5% and 0.3% respective gains, though it was still a wide-stretching rally, as about 80% of S&P stocks rose Thursday.
Sparking the broad equity gains was a decline in bond yields, as the benchmark 10-year U.S. Treasury yield sank three basis points to its lowest level in a month, a drop precipitated by the highest weekly unemployment claims reading since August, accelerating hopes for an interest rate cut as a weaker job market would support a growth-focused move.
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Surprising Fact
It was an unlikely winner driving the stock rally, real estate stocks, as the S&P’s real estate sector rose more than 2% on Thursday. The 12% post-earnings explosion from real estate investment trust Equinix drove much of the gains, though real estate’s 8% year-to-date loss makes it by far the S&P’s worst-performing sector still, as all 12 other sectors have risen more than 2% this year amid the extended rally.
Key Background
The Federal Reserve is holding interest rates at a decades-long high, a common strategy to curb inflation that typically leads to slower economic growth. Lower government bond yields mean financial institutions will likely offer lower interest rates for a variety of loans and indicate the market believes the Federal Reserve will lower its target rate soon. That would help stocks as lower interest rates make the debt financing that most corporations rely upon to fund operations less costly, boosting earnings power, as well as luring investors away from the slam-dunk higher returns offered by government bonds. Stocks remain comfortably below their all-time highs achieved early this spring, with the Dow sitting about 400 points below its record March 28 close.
