U.S. stocks rose on Thursday as investors looked for bargains in tech stocks, beyond a rise in Covid-19 cases in China following the country’s relaxation of its pandemic policies.
Wall Street faltered this week as the rapid spread of the coronavirus in China heightened risks to the global economy. There has been no fundamental change in this outlook, and Thursday’s decision is unlikely to mark a change in the general direction of the market.
The benchmark S&P 500 rose 1.7% and the Nasdaq Composite 2.6% as investors bought tech stocks such as Tesla, Netflix and Apple. Trading volumes were lower on Thursday with many investors on vacation, meaning relatively small trades can skew or exaggerate trends.
Shares of Tesla jumped 8.1%, after falling more than a third this month on fears the electric carmaker’s chief executive, Elon Musk, could be distracted by his Twitter purchase. Apple, which rose 2.8% on Thursday, fell 12% in December as investors worried about disruptions to its manufacturing operations in China. Netflix climbed 5.1%.
U.S. stocks may also have been supported by data on Thursday morning showing weekly jobless claims rose more than expected, by 9,000 to 225,000. While a significant deceleration in the labor market could suggest that aggressive efforts to the Federal Reserve to slow inflation have worked, Citi strategists noted that weekly levels are still in late 2019 ranges, suggesting the slowdown is not here yet.
Ahead of the market open, Bespoke Investment Group, a research group, pointed out that the tech-heavy Nasdaq was down 10.9% in the month to date.
“If the Nasdaq declines continue, it will be its worst December since 1971,” he said. “The tax-loss sale, and no buyer in sight, is likely playing a role in this recent weakness, and that pressure will end when the calendar changes.”
Gains in the United States supported benchmarks in Europe, which were hit by low trading volumes over the holiday season. The Stoxx 600 finished 0.6% higher. The commodity-heavy FTSE 100 recouped its morning losses to close 0.2% higher.
In commodity markets, Brent, the international oil benchmark, was down 1.2% to $82.26.
The yield on 10-year US government bonds fell 0.06 percentage points to 3.83%. Yields fall when prices rise.
Hong Kong’s Hang Seng index closed 0.8% lower, while China’s blue-chip CSI 300 index fell 0.4% as major cities across the country faced rising coronavirus cases. Covid.
Thursday’s declines came after China’s National Health Commission announced it would drop quarantine requirements for inbound passengers from January 8, even as the country suffers its worst Covid outbreak. The announcement was the latest relaxation of the government’s punitive zero-Covid policies, which have hurt economic growth.
A growing number of countries, including the United States and Italy, have announced they will require negative Covid tests for air passengers arriving from China.
Hong Kong also eased its pandemic restrictions on Wednesday, scrapping PCR testing on arrival in the Asian financial hub, as well as limits on eating out in restaurants.
