Robust bank earnings, softer inflation data and a solid update on the job market drove stocks to their best day in months on Thursday, as the market moved decisively higher after weeks of sideways waffling.
The S&P 500 rose 1.7 percent, its best day since early March, as a broad-based surge in share prices of materials, tech and health care companies lifted the index.
The gains suggested some investors could be overcoming worries about persistent price increases, a seeming slowdown in economic growth and the Federal Reserve’s plans to reduce some of the programs that have supported markets since the crisis hit. In September, that constellation of concerns pushed the market down 4.8 percent in its worst month since the pandemic struck.
But on Thursday, reports on corporate earnings from large banks set the tone by lifting financial shares.
Bank of America rose 4.5 percent after blowing past analysts expectations for its third-quarter numbers. The bank’s deal makers pulled in record advisory fees of $654 million amid a mergers and acquisitions boom on Wall Street. Morgan Stanley, likewise, brought in record revenue from advising companies on transactions, bolstering its results and driving its share price up around 2.5 percent.
The results from the banks signaled the open of the crucial third-quarter earnings season.
Some analysts have warned that it could be a moment of reckoning for investors, as sky-high expectations collide with the realities of the climbing costs and production problems many companies are contending with amid the messy pandemic recovery.
But on Thursday, investors found reason to be enthused in the numbers companies were reporting.
The drugstore giant Walgreens Boots Alliance blasted past expectations, sending its shares up more than 7 percent. The retailer said easing pandemic restrictions helped bolster sales, as did a higher-than-expected rate of coronavirus vaccinations. Shares of rivals CVS Health and Rite Aid were also higher.
The insurer UnitedHealth Group also did better than expected last quarter, sending its stock price up more than 4 percent.
On the economic front, the latest update on the job market, in the form of the weekly numbers on new unemployment insurance claims, helped assuage some worries. In a good sign, claims fell faster than economists on Wall Street had expected, reaching a new pandemic era low.
“We think that the labor market is continuing to recover,†Daniel Silver, an economist at JPMorgan Chase, wrote in a note to clients after the report.
On the inflation front, the Producer Price Index — a gauge of wholesale prices that will likely filter through to consumers in the following months — rose less quickly than expected, easing worries about a runaway price jag. It was the slowest increase since June and the first deceleration in 16 months, economists from analysts from Oxford Economics noted.
The yield on the 10-year Treasury note — which tends to rise when inflation concerns heat up — declined slightly to 1.52 percent.
Prices in commodities markets, however, continued to show that inflationary pressures are not going to vanish anytime soon. West Texas Intermediate, the benchmark American crude oil, rose 1.1 percent to $81.31 a barrel, close to marking a new seven-year high. Key industrial metals also rose. Copper, used in a wide array of construction and industrial settings, jumped 2.4 percent.
“Investors are mostly convinced that large parts of inflation will prove to be persistent, which is why commodities should see strong support for the rest of the year,†wrote Edward Moya, a senior market analyst at Oanda, a foreign currency exchange and brokerage firm.
European stock indexes were higher, with the Stoxx Europe 600 jumping 1.2 percent. Asian markets were mostly higher.
Coral Murphy Marcos and Lananh Nguyen contributed reporting.
