Stocks shake off wobbly start on Wall Street, end higher

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NEW YORK — Stocks on Wall Street overcame a shaky start to close broadly higher on Thursday, as major indexes more than offset their losses earlier in the holiday-shortened week.

The S&P 500 rose 1.8% as more than 85% of stocks in the benchmark index gained. The Dow Jones Industrial Average rose 1.3%, while the Nasdaq climbed 2.7%.

Tech stocks were a big part of the gains as Microsoft erased an early loss. Bond yields eased.

Trading has been choppy in recent days as investors remain concerned about inflation and the interest rate hikes the Federal Reserve is using to fight it. Thursday’s market rally may have been spurred, in part, by a report showing private sector hiring well below economists’ forecasts.

“The private payroll report was quite weak,” said Tom Hainlin, national investment strategist at US Bank Wealth Management. “Maybe this is one of those environments where people are looking for weak data that gives them hope that the Fed will pause (rate hikes) in September.”

The S&P 500 rose 75.59 points to 4,176.82. The index is up 7.1% since hitting the edge of a bear market two weeks ago.

The Dow added 435.05 points to 33,248.28, while the Nasdaq gained 322.44 points to 12,316.90.

Rising energy prices have fueled inflation, which is already at its highest level in four decades. U.S. gasoline prices hit a new record high on Thursday, with the average price at the pump costing $4.71 a gallon, according to the AAA Auto Club Federation.

Investors remain focused on the balance between inflation, rising interest rates and economic growth. The Federal Reserve is being closely watched as it attempts to blunt the impact of inflation by raising interest rates from historic lows during the pandemic.

Several economic reports released on Wednesday reinforced expectations that the Fed would continue to aggressively raise interest rates. Wall Street fears the Fed is slowing economic growth too much and potentially sending the economy into recession.

But on Thursday, payroll processor ADP reported that hiring by U.S. private companies rose by just 128,000 in May. That’s well below the 302,000 economists expected, according to FactSet.

Wall Street will get another glimpse into the health of the broader economy on Friday when the Labor Department releases its jobs report for May. The labor market was initially slow to recover from the impact of the virus pandemic, but rebounded strongly with low unemployment and ample job vacancies.

Meanwhile, high inflation is eating away at corporate profits, while the war in Ukraine and COVID-19 restrictions in China have also weighed on markets.

Tech stocks, whose high values ​​tend to give the broader market a bigger push up or down, accounted for much of the rally on Thursday. Chipmaker Nvidia jumped 6.9% and software maker Adobe rose 5.5%.

Communications stocks, companies dependent on direct consumer spending and some large industrial companies gained ground. Facebook parent company Meta Platforms rose 5.4%, Expedia Group added 6.3% and Boeing climbed 7.5%.

Small business stocks rose, signaling confidence in economic growth. The Russell 2000 gained 42.85 points, or 2.3%, to 1,897.67.

Bond yields have been relatively stable. The 10-year Treasury yield, which helps set interest rates on mortgages and other loans, fell to 2.91% from 2.93% late Wednesday.

Energy stocks fell. Chevron slipped 0.2%.

Investors continue to monitor corporate results and financial updates. Microsoft rose 0.8%, recovering from an early slump, after slashing its financial forecast for the current quarter. The software pioneer cited unfavorable changes in exchange rates. Online pet store Chewy jumped 24.2% after reporting strong profits.

Veiga reported from Los Angeles.

Steve R. Hansen