The major averages recovered from sharp early morning losses to finish higher Thursday. The Dow added 122 points while the S&P 500 climbed 0.8%. The Nasdaq Composite advanced 1.1%.
Economic data remained in focus following Tuesday’s soft manufacturing update which caused the S&P 500 to post back-to-back losses of 1% or greater for the first time in 2019. This morning, a separate update from the ISM showed non-manufacturing activity remained in expansionary territory but slowed to a reading of 52.6, the lowest level in three years. Meanwhile, initial jobless claims rose slightly more than anticipated to 219,000 last week. The weaker than anticipated economic updates have bolstered investor expectations of an additional interest rate cut in 2019. The CME Group, which tracks fed fund futures, now projects a 90% chance of a 25 basis point cut at October’s FOMC meeting, up from 40% just last week. Treasuries strengthened with the yield on the 10-year note off seven basis points to 1.53%.
All 11 S&P 500 sectors finished in positive territory with the Energy and Technology stocks pacing the gains. The Financials group was the worst performer on the session as falling Treasury yields weighed on bank stocks. In corporate news, PepsiCo gained 3.0% after the beverage maker beat Wall Street estimates on the top and bottom line. Elsewhere, shares of Constellation Brands slipped 6.1% after the adult beverage distributor fell short of analyst earnings expectations. In commodities, WTI crude declined 0.7% to $52.29/barrel, its 8th straight day of losses. COMEX gold added 0.3% to $1,506.10/ounce.