Stock Market Today

Stock Market Today: Jobless Claims Drop, Energy Stocks Pop

Pandemic-low unemployment claims Thursday lit a fire under energy stocks and helped the S&P 500 and Nasdaq squeeze out new highs.

The major indexes made a tidy little jump out of the gate Thursday in response to fresh, encouraging data on the employment front a day after a weak August ADP payrolls reading ruffled some feathers.

The Labor Department reported that jobless-benefits claims for the week ended Aug. 28 dipped to 340,000 – the lowest tally since March 2020, and 5,000 claims fewer than what economists expected – brighter news than yesterday's weak payroll report from payroll firm ADP.

U.S. crude oil futures rose 2.0% in response, to $69.99 per barrel, helping ConocoPhillips (COP, +3.6%), Exxon Mobil (XOM, +2.4%) and others benefited most from this early pop.

Stocks, however, broadly finished below their intraday highs. The S&P 500 (+0.3% to 4,536) and Nasdaq Composite (+0.1% to 15,331) both managed to scratch out fresh highs. The Dow Jones Industrial Average closed 0.4% higher to 35,443, and the small-cap Russell 2000 (+0.7% to 2,304) recorded its third consecutive improvement.

From here, attention shifts to tomorrow morning's August jobs report. "It feels like the market is set up for a 'Goldilocks' number after yesterday's ADP miss. ADP has not been a good indicator for the official data over the past year," says Michael Reinking, senior market strategist for the New York Stock Exchange. "Given the positioning, it feels like there is a little more risk if the number were to surprise to the upside. If nonfarm payrolls are above the estimate (~750k), this could very well push the Fed to move in September. Anything below 500k would provide some additional cover."

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Steve Sosnick, chief strategist at Interactive Brokers, provides additional insight into why the ADP report might not be indicative of what's to come tomorrow.

"It would be logical to think ADP payrolls offer an excellent guide to the nonfarm payroll numbers that follow. Unfortunately, the data shows otherwise," he says, noting that the correlation "stinks" over the past 20 years. "I believe that most of the differences stem from the different types of data that are collected. ADP data is collected from their customers, who skew larger, while (Bureau of Labor Statistics) data specifically attempts to reach smaller businesses."

Other news in the stock market today:

  • Online pet-goods retailer Chewy (CHWY, -9.3%) sank after announcing quarterly sales of $2.16 billion – up a robust 27% year-over-year but just shy of analysts' estimates. The company's net loss of 4 cents per share also came in deeper than expected (-2 cents), and Q3 sales guidance of $2.20 billion to $2.22 billion also disappointed the pros ($2.23 billion).
  • After plunging nearly 17% on Tuesday in the wake of a disappointing earnings report, Zoom Video Communications (ZM) shares have stabilized, adding 1.5% today. Zoom's latest quarterly results and subsequent stumble don't have Wall Street pros throwing in the towel, though. The majority maintain a Buy recommendation on ZM, and ARK Invest CEO Cathie Wood took the opportunity to buy the dip. You can read more about ZM stock's recent movements here.
  • Analysts are staying bullish on Five Below (FIVE), too, even as shares spiraled 13.0% following the discount retailer's turn in the earnings confessional. For its second quarter, FIVE reported better-than-expected earnings of $1.15 per share, but revenue of $646.6 million fell short of the consensus estimate. BofA Global Research analysts reiterated their Buy rating on the stock. FIVE's "diverse assortment and strong value proposition resonates with consumers seeking value and we see a long runway for growth," they wrote in a note. Meanwhile, Jefferies analysts say to "buy the dip" as "new store growth remains high ... and cash flow generation is strong."
  • Gold futures shed 2.5% to settle at $1,811.50 an ounce.
  • The CBOE Volatility Index (VIX) advanced 1.4% to 16.34.
  • Bitcoin enjoyed another up-day, climbing 2.3% to $49,329.97. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.) 
stock chart for 090221

YCharts

Healthcare: The Market's Steady Eddie Sector This Year

Healthcare stocks keep threading the needle in 2021.

The sector has delivered a 20.5% return so far this year – smack-dab in the middle of the market's 11 sectors, and just 28 basis points behind the S&P 500 itself, with exceedingly low volatility along the way. (A basis point is one one-hundredth of a percentage point.)

That performance illustrates the sector's two-pronged appeal: the potential for growth thanks to long-term spending trends as well as the development of blockbuster pharmaceutical and biotechnology treatments, and the defensive, income-minded production of established pharma firms whose products are a necessary expenditure for millions of Americans.

While you certainly have your pick of the litter with individual stocks, you might be among the investors who would prefer to simply grab a large portion of the sector and call it a day. We've explored several ways you can do that with top-notch healthcare exchange-traded funds (ETFs), which allow investors to get exactly the type of sector exposure they want. 

Most Popular

The 15 Best Stocks for the Rest of 2022
stocks to buy

The 15 Best Stocks for the Rest of 2022

The lesson of the past two years: Be ready for anything. Our 15 best stocks to buy for the rest of 2022 reflect several possible outcomes for the seco…
June 21, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
Retirement Comfort: How to Avoid Running Out of Money
retirement planning

Retirement Comfort: How to Avoid Running Out of Money

When it comes to retirement planning, one thing all of us worry about is whether we will have enough money to last. Financial professionals can help y…
June 25, 2022

Recommended

Micron Technology Earnings Expected to Show Strong Growth
stocks

Micron Technology Earnings Expected to Show Strong Growth

Our preview of the upcoming week's earnings reports includes Micron Technology (MU), Nike (NKE) and Walgreens Boots Alliance (WBA).
June 27, 2022
Stock Market Today (6/24/22): Stocks Stick the Landing in Successful Short Week
Stock Market Today

Stock Market Today (6/24/22): Stocks Stick the Landing in Successful Short Week

Small hints that inflation might have peaked and that the U.S. might evade recession stoked broad buying Friday.
June 24, 2022
Could Buffett Buy Out Occidental (OXY)?
stocks

Could Buffett Buy Out Occidental (OXY)?

All in, Berkshire Hathaway now owns a third of energy firm Occidental Petroleum. One analyst thinks Buffett might make a play for the rest.
June 24, 2022
Kiplinger's Weekly Earnings Calendar
stocks

Kiplinger's Weekly Earnings Calendar

Check out our earnings calendar for the upcoming week, as well as our previews of the more noteworthy reports.
June 24, 2022