Megacap stocks were doing their part to lift stocks on Thursday as a dynamic that had dominated markets for much of the year appeared to be making a comeback after a difficult stretch.
Many of the largest U.S.-traded stocks, including most, but not all, members of the so-called “Magnificent Seven,” have seen substantial losses recently, as a rotation trade that began in July morphed into a powerful broad-based selloff once August arrived.
Stocks that had driven much of the major indexes’ gains for much of the year suddenly found themselves out of favor with investors as traders grappled with signs of a cooling U.S. economy and the unwind of the yen carry trade.
But many of these names were bouncing back on Thursday, as shares of Eli Lilly & Co., Broadcom Inc., Advanced Micro Devices and Nvidia Corp. all saw big gains, ranging from 4% to 8%, according to FactSet data. Shares of Tesla Inc., Meta Platforms Inc. and Alphabet Inc. were also all up 2% or more, adding to the market’s gains.
These stocks helped boost information technology, communication services and health-care into the lead among the S&P 500’s 11 sectors.
Traders attributed stocks’ broad-based rebound on Thursday to the latest reading from weekly jobless claims data, which showed the number of Americans applying for first-time benefits last week was smaller than economists had expected.
Strategists said this helped soothe investors’ concerns about a weakening labor market.
“I have never seen the weekly jobless claims number have as big of an influence on the market’s psyche as I have now,” Marvin Loh, a macro strategist at State Street Global Markets, said during an interview with MarketWatch.
