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What's Pushing Stocks Higher Thursday

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Stocks rose Thursday morning, as investors continued buying last week's dip in tech stocks.

The S&P 500 rose 0.6% and the tech-heavy Nasdaq rose 1%. The 10-Year Treasury yield rose to 0.71%. Yields rise when prices fall. 

The Nasdaq is up 3% since Tuesday morning as investors are buying the dip after a 10% correction in growth tech stocks. Still, many say it’s very possible that there is a broader rerating of valuations in growth tech stocks like cloud, streaming and e-commerce stocks that could be underway. The at-home environment from the pandemic may have pulled forward massive amounts of demand for these services, leaving investors to question the level of earnings that one can reasonably expect in out-years of the valuation. 

Cyclical value stocks were up as well. They, too, experienced a dip, a more benign one and are also rising a bit, but less so than tech stocks are. Consumer discretionary, manufacturing and banking — as the yield curve expands — all rose a few tenths of a percentage point. 

This comes as jobless claims for the past week were at 884,000 against estimates of 840,000. Although the result missed expectations, it shows a trend in the last few weeks of claims being well under 1 million, a level they sat at for months. This indicates the economy is on its path towards recovery, although investors would ideally like to see that path accelerate. 

Also, the producer price index for August showed inflation of 0.3% against estimates of 0.2%, although that was below July’s result of 0.6%. The beat may have been a part of the inflation-related move in markets, with yields up (including for the 30-Year Treasury bond). Still, oil prices were down a tick. 

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