By Wallace Witkowski and Victor Reklaitis, MarketWatch
Shake Shack closes lower after earlier earnings rally
U.S. stocks ended higher Thursday, with the S&P 500 index
ringing up a new closing high, overshadowing a string of small
losses on the week.
The rally for stocks comes as U.S. economic reports offered no
real clarity on when the Federal Reserve may hike rates for the
first time since 2006.
A report on weekly jobless claims unexpectedly declined,
pointing to stability in the employment picture, while a measure of
inflation suggests that headline inflation is falling below the
central bank's 2% target-- the target the Fed is looking for before
it feels comfortable lifting rates.
The S&P 500 (SPX) rallied 22.62 points, or 1.1%, to close at
2,121.10, on track for a weekly gain of 0.2%. The benchmark index
also registered the highest close since April 24, when the S&P
500 settled at 2,117.69. Tech and consumer staples performed best
among the benchmark's 10 sectors, which all closed in positive
territory.
The Dow Jones Industrial Average (DJI) surged 191.75 points, or
1.1%, to close at 18,252.24, just 0.2% off its all-time closing
high of 18,288.63 set on March 2. The blue-chip stock index is on
pace for a weekly gain of 0.3%. The Nasdaq Composite (RIXF) gained
69.10 points, or 1.4%, to close at 5,050.80, tracking a nearly 1%
weekly gain.
Thursday's jump comes after months of a mostly sideways market.
Over the past six months, a lack of conviction in the market, mixed
economic data, and the running debate over when the Federal Reserve
will start raising rates
(http://www.marketwatch.com/story/feds-rate-hike-choice-is-september-or-december-kohn-says-2015-05-14)
have kept investors trying to figure out just where stocks are
heading, said Brad McMillan, chief investment officer for
Commonwealth Financial.
"What we do find is that we're starting to bottom out at higher
levels and move up," McMillan said. "The factors that make us worry
are not as significant as we thought."
McMillan believes the market may see a real breakout in another
month if economic data, particularly retail sales, firm up.
It may be that investors have been a little distracted.
Investors have been fixated on a volatile bond market
(http://www.marketwatch.com/story/treasury-prices-rise-after-weak-data-as-eurozones-bonds-also-rebound-2015-05-13),
among other things.
"A breakout has been elusive for the SPX as investors have
focused beyond the equity market," said Katie Stockton, chief
technical strategist at BTIG, in a note Thursday.
Check out: Here's what happens to stocks once the bond rout ends
(http://www.marketwatch.com/story/why-dollar-bulls-should-take-the-plunge-now-2015-05-06)
"As earnings season winds down, we would note that support
levels remain intact for the major indices, and breakdowns were not
too numerous among individual stocks," Stockton added.
Thursday's gains come after U.S. stocks closed virtually
unchanged
(http://www.marketwatch.com/story/us-stocks-poised-to-break-two-day-losing-streak-2015-05-13)
on Wednesday, as early gains faded. The benchmarks had initially
traded higher, after disappointing U.S. retail sales may have
prompted investors to bet that the Fed would delay interest-rate
increases this year.
The weak retail report also sent the dollar (DXY) sharply lower
Wednesday--a slide it continued
(http://www.marketwatch.com/story/dollar-index-slides-to-lowest-since-january-2015-05-14)
on Thursday. Read: Weakening dollar may boost second-quarter
earnings
(http://www.marketwatch.com/story/strengthening-dollar-may-boost-second-quarter-earnings-2015-05-13)
Thursday's economic reports: The latest reading for initial
weekly jobless claims showed a dip by 1,000 to 264,000
(http://www.marketwatch.com/story/jobless-claims-dip-to-264000-remain-at-15-year-low-2015-05-14),
as the pace of layoffs remains around a 15-year low. Economists
polled by MarketWatch had expected claims to rise to a seasonally
adjusted 275,000.
U.S. producer prices fell
(http://www.marketwatch.com/story/producer-prices-drop-04-in-april-on-lower-energy-food-costs-2015-05-14)
a seasonally adjusted 0.4% in April. Economists polled by
MarketWatch had predicted no change.
While no Federal Reserve speakers were scheduled for Thursday,
European Central Bank President Mario Draghi challenged an argument
(http://www.marketwatch.com/story/draghi-hits-back-at-argument-qe-fuels-inequality-2015-05-14)
that easing efforts will hurt savers and fuel inequality at the
International Monetary Fund in Washington. Read: Fed's rate-hike
path, not timing, is what matters, says Schwab strategist
(http://www.marketwatch.com/story/schwab-strategist-says-hike-path-not-timing-is-what-to-focus-on-2015-05-13)
Individual movers: Shares in Shake Shack Inc.(SHAK) closed down
4% after being up as much as 13% earlier in the session after the
burger chain late Wednesday reported first-quarter results that
topped estimates from Wall Street analysts
(http://www.marketwatch.com/story/shake-shack-raises-revenue-outlook-after-loss-2015-05-13).
Kohl's Corp.(KSS) reported first-quarter sales below forecasts
(http://www.marketwatch.com/story/kohls-reports-weak-sales-growth-stock-falls-2015-05-14),
sending shares 13% lower for the biggest drop among S&P 500
stocks.
Cisco Systems Inc.(CSCO) closed down 1% as investors digested
the tech giant's quarterly report, which came out late Wednesday
and showed better-than-expected profit and revenue
(http://www.marketwatch.com/story/cisco-beats-quarterly-expectations-as-product-sales-grow-2015-05-13).
Read more in Thursday's Movers & Shakers column
(http://www.marketwatch.com/story/kohls-nordstrom-applied-materials-shares-in-focus-2015-05-14)
Other markets: European stock markets were higher after erasing
losses (http://www.marketwatch.com/storyno-meta-for-guid), while
Asian bourses
(http://www.marketwatch.com/story/australian-shares-fall-on-iron-ore-weakness-2015-05-13-231034025)
closed mixed. Gold futures (GCM5) gained
(http://www.marketwatch.com/story/gold-edges-higher-as-bulls-try-to-build-on-momentum-2015-05-14),
while crude oil (CLM5)
(http://www.marketwatch.com/storyno-meta-for-guid)moved lower
(http://www.marketwatch.com/story/oil-dips-after-iea-report-points-to-oversupply-2015-05-14).
Subscribe to WSJ: http://online.wsj.com?mod=djnwires