Stock Market Today: Stocks Resume Their Winning Ways After Steep Selloff

Stocks spent Thursday rebounding from their worst selloff since October, helped by some upbeat earnings news and analyst upgrades, as well as increasing confidence that tomorrow's reading on inflation will bolster the case for additional interest rate cuts in 2024. 

On the economic front, the third estimate of gross domestic product (GDP) was revised lower to a 4.9% annualized rate in the third quarter, the Commerce Department's Bureau of Economic Analysis said. GDP was thought to have grown at a 5.2% annualized pace in Q3. 

Separately, initial applications for unemployment benefits rose a smaller-than-expected 2,000 to a seasonally adjusted 205,000, the Department of Labor reported. The weekly jobless claims data once again reveal a robust labor market, experts say.

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"Initial claims for unemployment benefits continue to remain below what we saw pre-pandemic levels, pointing to a strong labor market with relatively low layoffs and no signs of stress," writes Sonu Varghese, global macro strategist at Carson Group. "Continuing claims have also been steady since summer, indicating hiring has normalized. It's a labor market where laid off workers are able to find jobs fairly quickly."

The stock market has been rallying on optimism over easing inflation and expectations the Federal Reserve will start cutting interest rates as soon as Q1 of next year. 

Futures traders currently assign a 71% probability to the Federal Open Market Committee (FOMC) enacting its first quarter-point rate cut in March, according to CME Group's FedWatch Tool. Moreover, traders put the odds of the short-term federal funds rate being at a target range of 4.75% to 5.0% in May at greater than 70%. That's far looser than the Fed's current target range of 5.25% to 5.5%. 

With rate policy being top of investors' minds, tomorrow's reading on rising consumer prices will certainly be in focus. The November Personal Consumption and Expenditures (PCE) index – a measure of consumer spending said to be the Fed's favorite inflation metric – will be released before Friday's open.

Micron pops on beat-and-raise quarter

In single-stock news, Micron Technologies (MU) saw its shares soar after the only U.S. memory and storage chipmaker beat Street estimates and lifted its outlook. Micron added about $8 billion in market value Thursday, or about the entire market capitalization of toy maker Hasbro (HAS). 

Micron's action helped lift chipmakers broadly, with the PHLX Semiconductor Sector index gaining more than 2% Thursday. 

In other positive corporate news, Salesforce (CRM) gained ground after Morgan Stanley analyst Keith Weiss upgraded shares in the top-rated Dow Jones stock to Overweight (the equivalent of Buy) from Equal Weight (Hold). The analyst contends the market is failing to appreciate CRM's opportunities in generative artificial intelligence (AI). 

"Low investor expectations versus potential top-line upside drivers in price increases, product bundling and data cloud adoption, frame an attractive risk-reward for Salesforce," wrote Weiss in a note to clients.

At the closing bell, the blue-chip Dow Jones Industrial Average added 0.8% at 37,404, while the broader S&P 500 gained more than 1% to 4,746. The tech-heavy Nasdaq Composite jumped 1.3% to end at 14,963. 

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