Stocks held on for a win Thursday as bad-news-is-good-news jobs data offset a number of negative earnings reactions. The report lifted expectations for a September rate cut and kept the main indexes higher through the close.
At the close, the Dow Jones Industrial Average was up 0.9% at 39,387 – its seventh straight win – on strength in Home Depot (HD, +2.5%) and Caterpillar (CAT, +2.1%). The S&P 500 rose 0.5% to 5,214, and the Nasdaq Composite gained 0.3% to 16,346.
Lifting markets early on were initial jobless claims, which rose by 22,000 last week to 231,000. This is the highest level since August and more than the 214,000 claims economists expected.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
While the actual number of jobless claims isn't concerning, "the upward surge in the data warrants caution," says José Torres, senior economist at Interactive Brokers. A continued rise in claims at this pace could lead to elevated unemployment levels, he adds.
Torres also notes that the data has investors increasing their rate-cut expectations, "as Fed Chair Powell has consistently stated that softening labor conditions would compel the central bank to ease monetary policy."
Indeed, according to CME Group's FedWatch Tool, futures traders are now pricing in a 50% chance that the first quarter-point rate cut will come at the Fed's July meeting, up from 49% one day ago and 46% one week ago.
The labor market update was the lone economic event today. Still, market participants had their hands full with several single-stock headlines.
Arm earnings drag on chip stocks
In earnings news, Roblox (RBLX) plunged 22.1% after the online gaming platform reported a massive Q1 revenue miss ($801.3 million actual vs $918.8 million estimate). The company's first-quarter bookings and second-quarter revenue and bookings forecasts also fell short.
Elsewhere, Arm Holdings (ARM) was down nearly 8% in intraday trading after the British chip designer's soft full-year revenue forecast outweighed the company's fiscal Q4 top- and bottom-line beats. ARM stock ended the day with a more modest 2.3% loss, but the volatility dragged on fellow semiconductor stocks such as Advanced Micro Devices (AMD, -0.8%) and Broadcom (AVGO, -1.5%).
Nvidia (NVDA) was another chipmaker that closed lower after Arm earnings, shedding 1.8%, or $42 billion in market value. NVDA will take its own turn in the earnings spotlight later this month when it unveils its Q1 results after the May 22 close.
Next week's CPI report in focus
Looking ahead, the University of Michigan's preliminary reading on its May Consumer Sentiment Index is due tomorrow. However, it is the next Consumer Price Index (CPI), set for release ahead of Wednesday's open, that's top of mind for those following the economic calendar.
BofA Securities economists expect the data to show headline CPI rose 0.3% month-over-month and 3.4% year-over-year in April. While this is slightly lower than in March, the group does not feel it is enough of a moderation to give the Fed confidence to start cutting interest rates.
Related content
- Kiplinger's Earnings Calendar for This Week
- Warner Bros. Discovery Stock Up After Earnings, Disney Plus Bundle Deal
- Robinhood Reports Record Q1 Earnings After Cryptocurrency Surge
-
A Meteorite May Have Hit a Home in Georgia. Would Insurance Cover the Damage?In a rare event, a meteorite may have crashed through the roof of a Georgia homeowner. Here’s what home insurance would cover.
-
My Car Was Stolen — Here’s What I Did and How You Can Protect YourselfDon’t wait until it happens to you. Learn how to prepare for auto theft, protect your vehicle and respond quickly if your car is stolen.
-
Why Smart Retirees Are Ditching Traditional Financial PlansFinancial plans based purely on growth, like the 60/40 portfolio, are built for a different era. Today’s retirees need plans based on real-life risks and goals and that feature these four elements.
-
To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around YouWhile thinking about succession planning might feel like anticipating a landslide (here's to you, Fleetwood Mac), there are strategies you can implement to manage the uncertainty and the transition.
-
Stock Market Today: S&P 500, Nasdaq Near New HighsThe S&P 500 hasn't hit a new high since February. It's been since December for the Nasdaq.
-
The Bull Case for the Second Half of 2025This strategist sees a volatile market segueing to a strong close this year.
-
7 Essential Investing Rules We All Should KnowThe best time to start investing is right now. That's just one vital rule investors should be familiar with. Here are six more.
-
These Are the Key Tariff Issues to Watch in Coming MonthsWhile they're not dominating headlines right now, tariffs are not over. Some key dates are coming up fast that could upend markets all over again.
-
Technology Unleashes the Power of Year-Round Tax-Loss HarvestingTech advancements have made it possible to continuously monitor and rebalance portfolios, allowing for harvesting losses throughout the year rather than just once a year.
-
The Fiduciary Firewall: An Expert's Five-Step Guide to Honest Financial PlanningArmed with education and awareness, you can avoid unethical people in the financial industry by seeking fee-only fiduciaries and sharing your knowledge with others.
