ServiceNow, whose platform helps companies automate and connect processes, was another one of the strongest forces pushing upward the S&P 500. It jumped 5.6 per cent after delivering stronger profit and revenue than expected, driven by interest by customers to incorporate artificial-intelligence technology.
Stocks have broadly regressed this week after the S&P 500 and Dow both set records at the end of last week. They’ve been hurt by rising Treasury yields in the bond market, which can make investors less willing to pay high prices for stocks. Critics had already been saying beforehand that stocks looked too expensive given how much faster their prices have risen than corporate profits.
Yields have climbed as report after report has shown the US economy remains stronger than expected. That’s good news for Wall Street, because it bolsters hopes the economy can escape from the worst inflation in generations without the painful recession that many had worried was inevitable.
But it’s also forcing traders to ratchet back forecasts for how deeply the Federal Reserve will cut interest rates, now that it’s just as focused on keeping the economy humming as getting inflation lower. With bets diminishing on how deeply the Fed will ultimately cut its overnight interest rate, Treasury yields have also been given back some of their earlier declines.
A report on unemployment claims Thursday offered a mixed picture on the job market. It said fewer workers applied for unemployment benefits last week, which can be a signal of relatively low layoffs. But it also said the total number of those collecting benefits rose to its highest level in almost three years.
Altogether, the numbers show a slowing economy, “but there is no sign of a crash in employment or a surge of layoffs in these data,” according to Carl Weinberg and Rubeela Farooqi at High Frequency Economics.
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Treasury yields, which had eased overnight, pared their losses after the release of the unemployment claims report before yo-yoing. The yield on the 10-year Treasury was at 4.20 per cent, down from 4.25 per cent late Wednesday. It’s still well above its 4.08 per cent level from late last week.
A separate preliminary report said growth in US business activity may have accelerated slightly last month, as strength for companies in services industries continue to make up for weakness in manufacturing. The report from S&P Global also showed a recovery in confidence as companies anticipate greater stability and certainty after the upcoming presidential election.
A third report, meanwhile, said sales of new homes were stronger last month than economists expected.
