Stocks recover lost ground as volatility tapers.
US stocks rebounded Thursday from the biggest rout in at least eight months, as the combination of upbeat earnings and stronger than expected data lifted investor sentiment.
The large-cap S&P 500 Index (NYSEARCA:SPY) rose 0.4% to 2,365.72, with nine of 11 sectors reporting gains.
The S&P 500’s telecom index was the best performer, rising 1.2%. Shares of financials and healthcare companies also rose at least 0.3%.
The Dow Jones Industrial Average (NYSEARCA:DIA) climbed 0.3% to settle at 20,663.02.
Meanwhile, the technology-heavy Nasdaq Composite Index (NYSEARCA:QQQ) finished up 0.7% at 6,055.13, a mere 24 hours after recording its biggest drop in almost one year.
After surging 46% on Thursday, the CBOE VIX Volatility Index (NYSEARCA:VXX) closed down 6% at 14.66. The so-called “fear index” approached six-week highs on Wednesday as investors cut ties to riskier assets in the wake of possibly disturbing revelations in Washington.
On the earnings front, Wal-Mart Stores Inc. posted higher than expected quarterly profits, shoring up confidence in the retail sector. The mega retailer posted earnings per share of $1.00 on revenue of $117.5 billion. Same-store sales in the U.S. grew 1.4%.
In economic data, US jobless claims declined unexpectedly last week and the number of Americans continuing to receive benefits fell to more than 28-year lows. The numbers shored up confidence in the domestic economy despite a weak start to the year.
The Final Word: The sharp correction on Wednesday suggests we may be approaching the end of the Trump rally, as investors begin to doubt the political resolve of the new administration. Movements in the VIX could grow sharper in the coming weeks as lower trading volumes trigger bigger fluctuations in the S&P 500.