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Earnings and Economic Data Are Beating, But Stock Gains Are Muted

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Stocks were mixed Thursday, even as earnings and economic data rolled in beating expectations. Investors are looking ahead at several headwinds weighed against the backward-looking information.

The S&P 500 rose 0.1%, with the tech-heavy Nasdaq up 0.3%. The 10-Year Treasury yield rose to 0.83%. Yields rise when prices fall. The yield is up from 0.71% in the past week or so, as expectations for firming inflation and demand are strong.

Positively, Coca-Cola  (KO) beat revenue and earnings estimates, posting revenue of a touch more than $8 billion for the quarter, a few hundred million dollars higher than analyst’s estimates. Revenue declines are improving to single digits in percentage terms year-over-year, as restaurant and sports-related sales take a pandemic-induced dive. The stock rose 1.6%.

Tesla  (TSLA)  shares rose a slightly after an impressive earnings beat. Revenue was $8.8 billion against estimates of $8.3 billion and the company is positioned to deliver a total of 500,000 vehicles this year and to grow that number aggressively net year. The stock rose 3.4% Thursday.

But those are results from the past few months.

Another positive: initial jobless claims for the past week were 787,000 against estimates 860,000 and lower than last week’s reading of 842,000. This speaks to an apparent improvement in the labor market and may quell anxieties that the slowing economic recovery can resume its previous pace.

But that’s also backwards looking.

Questions over the probability of a speedy fiscal stimulus bill and coronavirus vaccines out in the next few months remain, although market participants are confident in the continued economic recovery and the liquidity position of the consumer and many companies across sectors. Put those marginal near-term concerns against S&P 500 that has experienced a broad rally of a bit over 9% in the past month and stocks are taking a breather, many on Wall Street say.

The past two days, stocks have exhibited muted moves in an apparent pause to an ongoing rally.

Large cap growth stocks drove much of the S&P 500’s gain. 

Stocks across non-tech sectors were essentially flat, with some up a touch and others down a touch, mostly posting muted moves. 

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