Wall Street has rallied in a rocky session as beaten-down technology shares gained favour after data showing a surge in the sale of new homes revived faith in the economic recovery even as US jobless claims rose unexpectedly.
Stocks also reacted positively to news of efforts to enact further stimulus in Washington DC, helping lift the S&P to a session high, although the index then turned negative before retracing some gains.
Apple Inc, Amazon.com Inc, Nvidia Corp and Facebook Inc – stocks that have outperformed at a time of increased economic uncertainty – all rose.
The wild session indicated caution was in store, said Dennis Dick, a trader at Bright Trading LLC, who warned market sentiment that drove momentum has sharply changed.
“Fear of missing out has turned into to fear of losing actual money,” Dick said.
“This is a shake-out of all the Robinhood traders, a shake-out of retail investors. They’re getting punished, and rightfully so, because you can’t just buy stocks out of a hat thinking stocks only go up.”
Democrats in the US House of Representatives are working on a $US2.2 trillion ($A3.1 trillion) coronavirus stimulus package that could be voted on next week, a key lawmaker said, as House Speaker Nancy Pelosi reiterated she is ready to negotiate with the White House.
Wall Street started the day lower after the jobless claims data.
The S&P 500 briefly fell 10 per cent below the intraday record peak it hit on September 2 for the second time in recent days.
Dow constituents, considered a barometer of economic confidence, lagged the S&P 500 as data showed 870,000 people in the US applied for jobless benefits in the week ended September 19, up from 866,000 in the previous week.
Homebuilders rose 0.73 per cent after the Commerce Department reported that sales of new single-family homes rose to their highest level in nearly 14 years in August.
That report followed data this week showing sales of previously owned homes also near a 14-year high.
Phil Orlando, chief equity strategist at Federated Hermes, said notwithstanding spats of poor data, the US economy is on a path to a powerful V-shaped recovery as seen in car and property sales and overall consumer spending.
“All of the inventory rebuilding is starting, all of the things you want to see are happening,” Orlando said.
“Now, are there some chinks in the armour? Yes, just saw it in the claims numbers this morning.”
The Dow Jones Industrial Average closed up 52.31 points, or 0.20 per cent, to 26,815.44, the S&P 500 gained 9.67 points, or 0.30 per cent, to 3,246.59, and the Nasdaq Composite added 39.28 points, or 0.37 per cent, to 10,672.27.
Volume on US exchanges was 10.43 billion shares, up from 10.04 billion shares on Wednesday.
The CBOE volatility index, known as Wall Street’s fear gauge and which is hovering near two-week highs, is expected to climb in the run-up to the quarter-end next week.
“The key is the VIX index, which has not yet reached levels that would suggest a continued strong move to the downside,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“So you might get a day of bargain hunting followed by a day of selling, but as the last days of September come into place, we should begin to see some sort of window dressing by institutions.”
Nikola Corp, which is set for its biggest weekly decline ever, slid 9.69 per cent as Wedbush downgraded the stock to “underperform”.
Accenture Plc fell 7.04 per cent after the IT consulting firm forecast current-quarter revenue below expectations while US-listed shares of BlackBerry Ltd initially jumped after the Canadian security software firm posted a surprise rise in quarterly revenue but finished the day lower.
Declining issues outnumbered advancing ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.36-to-1 ratio favoured decliners.
The S&P 500 posted no new 52-week highs and two new lows; the Nasdaq Composite recorded 12 new highs and 129 new lows.