Wall Street’s major indexes surged nearly 2% on Thursday, fueled by a stronger-than-expected jobs report that alleviated concerns about a looming economic slowdown. The data revealed a sharper-than-anticipated drop in new unemployment benefit applications last week, dispelling fears that the labor market was unraveling.
This positive shift in sentiment helped stabilize megacap and growth stocks, which had been in free fall following a disappointing July jobs report that had sparked recession concerns. Nvidia led the gains with a 4.4% surge. According to Skyler Weinand, Chief Investment Officer at Regan Capital, “Just because the labor market is cooling off doesn’t mean we’re entering into a recession.”
All major S&P sectors saw gains, with information technology and communication services leading the charge. Global markets also began to recover from the earlier week’s volatility, triggered by concerns over interest rate hikes and weak demand in the U.S. Treasury market.
J.P. Morgan raised the likelihood of a U.S. recession by the end of the year to 35%, up from 25%, citing reduced pressure in the labor market.
By late morning, the Dow Jones Industrial Average had risen 589.53 points (1.52%) to 39,352.98, the S&P 500 gained 99.37 points (1.91%) to 5,298.87, and the Nasdaq Composite climbed 360.42 points (2.23%) to 16,556.23.
On the earnings front, Eli Lilly jumped 7.9% after raising its annual profit forecast, driven by the success of its weight-loss drug Zepbound, which surpassed $1 billion in quarterly sales. Under Armour surged 19.2% following a surprising first-quarter profit. Conversely, Bumble saw its shares plummet 32.6% after slashing its annual revenue growth forecast, while Warner Bros Discovery and Monster Beverage also faced significant declines.
Investors are now looking ahead to comments from Richmond Fed President Thomas Barkin for insights into the Federal Reserve’s next moves.