S&P 500 begins second half of 2021 at new peak as labor market heals

The S&P 500 index kicked off the second half of the year at a record high on Thursday as data showed fewer-than-expected weekly jobless claims, while energy stocks were supported by a spike in oil prices.

Ten of the 11 major S&P sectors rose, with energy, financials, industrials and materials leading the charge.

Initial claims for state unemployment benefits dropped 51,000 to a seasonally adjusted 364,000 in the week ended June 26, while layoffs plunged to a 21-year low in June as companies held on to their workers amid labor shortages.

“This morning’s beat on jobless claims is a real bright spot,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.

“Staying below that big-round-number 400,000 level could bolster confidence in risk-taking during the dog days of summer.”

Separately, ISM data showed U.S. manufacturing activity grew at a moderate pace in June but employment contracted for the first time in seven months.

With the S&P 500 and the Nasdaq hitting a series of record highs last month, investors are razor-focused on Friday’s nonfarm payrolls report, where a strong reading could force the U.S. Federal Reserve to rethink its accommodative stance.

Focus also shifts to the second-quarter earnings season in the coming weeks to gauge whether the first-half momentum could continue further for the remaining year.

“You can make a case for the market being expensive, but I don’t think we’re headed for any major correction. Could we see a pullback as we wait for the earnings? That’s a possibility,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

At 11:38 a.m. ET, the Dow Jones Industrial Average was up 82.70 points, or 0.24%, at 34,585.21 and the S&P 500 was up 11.28 points, or 0.26%, at 4,308.78. The Nasdaq Composite was down 39.56 points, or 0.27%, at 14,464.40.

Walgreens Boots Alliance Inc dropped 5.7% as it lowered its forecast for COVID-19 vaccine shots to be administered this year.

Micron Technology Inc slumped 5.4% even as the chipmaker beat estimates for quarterly profit and forecast fourth-quarter revenue above expectations.

Didi Global Inc jumped 14.1%, a day after its shares ended their first day of U.S. trading slightly over their initial public offering price, valuing China’s ride-hailing giant at $68.49 billion.

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