Stocks Rally as Recession Fears Ease
Stocks made a significant comeback today, driven by positive labor market updates and optimism among bargain hunters. This surge comes after a week of heightened market volatility due to disappointing economic data, which fueled talks of a potential recession and concerns that the Federal Reserve might have delayed interest rate cuts.
Over the past week, major indexes experienced losses between 5% and 8%. However, today's numbers tell a different story: the Dow Jones Industrial Average rose by 1.8% to reach 39,446, the S&P 500 climbed 2.3% to 5,319, and the Nasdaq Composite increased by 2.9% to 16,660.
Encouraging Labor Market Data
Recent data from the Department of Labor showed a decline in initial jobless claims by 17,000 last week, landing at 233,000. This was a more considerable drop than economists had anticipated. Notably, the July jobs report had indicated a slowdown in hiring, but today's figures provide reassurance about the labor market's stability. As Skyler Weinand, Chief Investment Officer at Regan Capital, mentioned, "Just because the labor market is cooling off doesn't mean we're entering into a recession."
Palantir and Microsoft Partnership
In corporate news, Palantir Technologies (PLTR) experienced an impressive 11.3% rise in its stock price following an announcement of a partnership with Microsoft (MSFT, +1.1%). This collaboration aims to offer secure cloud, analytics, and AI capabilities to the U.S. government. Palantir's government contracts contribute to over 40% of its revenue, which was highlighted in its latest earnings report that initially bumped PLTR stock up by 10% earlier in the week. With today's gains, Palantir has risen over 18% this week.
Eli Lilly's Earnings Boost
Eli Lilly (LLY) shares surged by 9.5% after the company outperformed expectations for its second-quarter earnings, largely driven by its popular weight-loss drugs. The pharmaceutical company also revised its full-year financial forecast upwards. According to Jefferies analyst Akash Tewari, Eli Lilly's GLP-1 drugs make it a "must-own" stock, and their advanced combination treatments might lead to a period of unprecedented revenue and earnings-per-share growth in the pharmaceutical industry.
Robinhood and Klaviyo's Impressive Results
Elsewhere, Robinhood Markets (HOOD) saw a 3.6% boost in its stock following record earnings and revenue reports for Q2. "HOOD's Q2 performance, including record net deposits of $13 billion, highlights strong momentum," says Mizuho Securities analyst Dan Dolev. Robinhood is still in the early stages of its disruptive journey in the brokerage industry.
Similarly, Klaviyo (KVYO) shares soared 33.4% after announcing better-than-expected Q2 results and an improved full-year forecast. Mizuho Securities analyst Siti Panigrahi noted, "Klaviyo's results reflect strong execution and growth potential. Despite current macroeconomic challenges, KVYO's forecasts for 2024 and 2025 seem secure, offering an attractive entry point for investors."
