Stocks ticked higher Thursday as the market tried to build on its recent gains, and traders looked ahead to key inflation data next week as well as the Federal Reserve’s latest policy announcement.
The Dow Jones Industrial Average gained 177 points, or 0.5%. The S&P 500 traded 0.6% higher, while the Nasdaq Composite climbed 1.2%.
Amazon led tech shares higher after bullish analyst commentary. The tech giant’s shares rose more than 2% and pulled the Technology Select Sector SPDR Fund up 1% Thursday.
The S&P 500 is coming off a down session but is still within striking distance of the key 4,300 level. The broader market index also hit its highest level since late August this week, adding to a 2.2% rally month to date. The index is higher 7% over the past three months.
Small-cap stocks have been showing strength in recent weeks. The Russell 2000 is up 7.6% in June and almost 7% year to date, indicating a potentially more resilient economy beyond the big-tech boom. However, the index dipped 0.2% on Thursday.
“For all the folks who are very concerned about the narrowness of the rally, there is a little bit of a rotation going on into some of the more beat-down value and cyclical stocks. … So overall, pretty healthy activity,” said Ross Mayfield, investment strategy analyst at Baird.
Investors seem to be in a holding pattern while awaiting the Federal Reserve’s upcoming policy meeting on June 13 and 14. Economic signs suggest that inflation is inching down, even as it remains above the central bank’s 2% target. Mayfield added that the central bank may “feel a little bit more comfortable pausing in June, with plenty of optionality through July and beyond.”
New weekly jobless claims data released on Thursday showed initial jobless claims reached their highest level since October 2021, indicating a potentially softening labor market. The uptick also raised expectations the Federal Reserve would pause its rate-hiking campaign at its meeting next week.
However, Mayfield noted a pause may not necessarily mean an end to its rate hike campaign. He said the Bank of Canada‘s decision to resume raising rates after a pause earlier this week could “add some color to a Fed decision.”
Markets are pricing a 72.5% chance that the Fed keeps rates steady at the next meeting, according to the CME FedWatch Tool.
— CNBC’s Jeff Cox contributed to this report.
