Stock market today: Dow pops for 7th straight day as S&P 500 climbs back above 5,200

It was another positive day for the unloved sectors of the past few years during Thursday's trading action.

Real Estate (XLRE), the worst-performing sector in the S&P 500 over the past two years, popped more than 2% on Thursday. The sector took a notable leg higher in the afternoon after the latest reading on mortgage rates showed their first decline in more than a month.

Utilities (XLU), the second-worst-performing sector of the past two years, rose more than 1%. The sector has now risen for seven straight trading sessions in a move strategists recently told Yahoo Finance is likely part of a "catch-up" trade, given the sector's massive underperformance entering the rally.

A hallmark of the market rally over the last year has been a momentum trade in hot emerging themes.

And given the Dow Jones Industrial Average's (DJI) widespread exposure to a variety of sectors, the major index has lagged the S&P 500 significantly as themes like artificial intelligence and the rise of weight-loss drugs have helped drive the action in the S&P 500 (^GSPC).

But in recent trading sessions, the Dow has bucked that trend. The index is up 1.3% in the last month compared to the S&P 500's flat return.

Thanks to newly added Amazon (AMZN), the Dow's increased exposure to AI and tech has been at work recently. Amazon is up 9% in the past seven days, the second-best performer in the Dow. Apple (AAPL) and Microsoft (MSFT) also crack the top five performers in the index over the same period.

But the largest mover in the index has been Amgen (AMGN), bringing the Dow its first taste of the red-hot weight-loss trade on Wall Street. Up until last week, the Dow's healthcare exposure hadn't been impacted by the increased interest in prescription weight loss as industry leaders Eli Lily (LLY) — a top 10 stock by market cap in the S&P 500 — and Novo Nordisk (NVO) aren't in the index.

But on May 3, Amgen announced positive test results on its GLP-1 injectable for obesity, MariTide. Shares are now up more than 14% in the last week, leading the Dow in its recent streak of gains.

Below is a look at the Dow components over the last seven days.

Last week, mortgage rates slipped for the first time in over a month, with the 30-year fixed mortgage rate hitting 7.09%.

Yahoo Finance's Rebecca Chen reports:

Recent rate volatility — including this week's drop from 7.22% and last month's steady rise — has prompted some financial institutions to modify their mortgage outlook for the rest of 2024.

"An environment where rates continue to hover above 7% impacts both sellers and buyers. Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated," said Sam Khater, Freddie Mac's chief economist. "These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment."

Robust economic data and stubborn inflation have driven housing experts to change their forecast of where rates will land at the end of 2024.

Fannie Mae, a government-backed mortgage institution, increased its year-end prediction to 6.4% from 5.9% earlier this year.

"Our … forecast includes the Fed cutting interest rates 25 basis points two times in the fall," Douglas Duncan, Fannie Mae's chief economist, told Yahoo Finance.

The Federal Reserve held the federal funds rate steady last week. Meanwhile, mortgage rates — influenced by the Fed's benchmark — have surged past 7% over the last three weeks.

To land at or near the modified forecast, Duncan said the core Personal Consumption Expenditure (PCE) index — the Fed's preferred gauge for inflation — will need to drop toward 2% for at least three consecutive months. The latest core PCE gained 2.8% in March year over year.

The National Association of Realtors (NAR) now expects average rates to settle at 6.5% by year-end, modified from the 6.3% predicted at the beginning of the year.

"The Federal Reserve has delayed rate cuts," said Lawrence Yun, NAR's chief economist. "I would have thought that by now, rates would be lower and rate cuts would have begun. Whatever rate cut the Federal Reserve does not do this year will simply get pushed back to 2025. They're calling for a September rate cut, but we'll see."

The economic data flow of the last few weeks has shown cracks in the US economy's resilience narrative.

On Thursday, weekly jobless claims hit their highest level in eight months. This furthered signs of cooling in the labor market shown in last week's April jobs report, which came in softer than expected across the board. And that followed data from the manufacturing sector that indicated activity in the sector has moved back down from expansionary territory.

And while economists reasoned volatile categories drove a surprise miss in the advance estimate of first quarter GDP, the 1.6% annualized growth seen in the first quarter was a far cry from the 3.4% seen in the fourth quarter.

The "bad" economic news has largely been good from a market perspective. The S&P 500 (^GSPC) hit its recent bottom on April 19, the same week the Citi Economic Surprise Index began turning lower (a sign that economic data is falling short of Wall Street's expectations). Treasury yields have come off their 2024 highs, and the market is again becoming more optimistic about the prospect of Federal Reserve interest rate cuts this year.

But all of this still raises the question of when weak economic news is once again simply bad for the market and signaling a broader slowdown in the US economy.

Moody's Analytics chief US economist Mark Zandi told Yahoo Finance on Thursday that we're still far from that potentially harsh reality.

"We're a long way from [signs of a recession]," Zandi said. "The economy is generally resilient."

But Zandi did quip that if he "were king for the day" he'd be cutting interest rates to provide relief for the economy.

"Rates are corrosive on the economy," Zandi said. "They wear the economy down and, at some point, something could break."

As Paramount (PARA) continues its search for a potential buyer, Warner Bros. Discovery (WBD) seems open to acquiring some of its content, if the opportunity were to present itself.

On a call with analysts following the company's first quarter earnings report on Thursday, WBD CEO David Zaslav said the media giant is "always looking for good content."

"Anytime there's an opportunity to buy content that we think will enhance our offering, whether it's a specific piece of content or whether it's a broad swath of content, if we think it can provide a better consumer experience and strengthen our offering, we're always looking at opportunities," Zaslav said.

The comments come as Paramount weighs a joint $26 billion bid from Sony Pictures Entertainment and private equity firm Apollo Global Management after exclusive talks lapsed between the media giant and David Ellison's Skydance Media. (Disclosure: Yahoo Finance is owned by Apollo.)

WBD has also been at the center of M&A talks with its two-year post-merger lockup period officially over. While speaking at the annual Milken Institute conference in Beverly Hills earlier this week, Zaslav side-stepped talks about whether or not he'd be interested in acquiring a company like Paramount.

"Paramount is a great company. We have a number of great content companies. For us, our goal is to [do] the best we can with the businesses that we have," he said. "You need to look at your peers. You need to know what everyone is doing and learn from them, but ultimately, you're going to be successful if you do a good job with the assets that you have."

Click here for a catchup on WBD earnings and here for a breakdown of Paramount's buyout talks.

Roblox (RBLX)

Roblox shares fell roughly 21% after the gaming platform slashed its annual bookings forecast, raising concerns of lower player engagement.

Year to date, the stock is down about 28%.

Arm Holdings (ARM)

Arm shares dropped about 4% Thursday after the chip designer's revenue guidance failed to excite investors, raising worries that spending on artificial intelligence may start to slow.

The stock is still up about 47% year to date.

Airbnb (ABNB)

Shares of Airbnb fell roughly 7% after the short-term-rental platform issued a weaker-than-expected outlook for the second quarter, eliciting concerns about slowing growth in the vacation rental market.

Year to date the stock is up about 9%.

The S&P 500 (^GSPC) rose back above the 5,200 level for the first time in almost a month as a jump in weekly jobless claims spurred expectations of Fed rate cuts this year.

The broader index rose 0.4%, touching its highest level since April 11.

Stocks rose as the yield on the 10-year Treasury (^TNX) moved lower to 4.48% following the Labor Department's latest jobless claim data released Thursday morning. Initial claims last week jumped to their highest levels since August.

Stocks solidly moved into green territory mid-morning led by gains of more than 200 points on the Dow Jones Industrial Average (^DJI).

The Dow Jones Industrial Average (^DJI) turned positive in early trading, rising as much as 200 to a session high. The index is on track for a seventh-day winning streak.

The S&P 500 (^GSPC) rose 0.3% while the tech-heavy Nasdaq Composite (^IXIC) flipped into green territory.

Real Estate (XLRE) stocks led the gains, followed by Energy (XLE) and Materials (XLB).

Department of Labor data released this morning showed initial jobless claims jumped to 231,000 last week, their highest level since August. The print lifted investor expectations that the Federal Reserve will need to cut rates this year amid a slowing job market.

Yahoo Finance's Alexis Keenan reports:

Three big real estate brokerage firms are heading to court Thursday, hoping to finalize sweeping settlements that promise dramatic changes to real estate commissions across the US.

Keller Williams, RE/MAX (RMAX), and Realogy (HOUS) are seeking final approval of three separate agreements with home sellers that amount to roughly $209 million.

That follows similar preliminary settlements of $418 million from the National Association of Realtors (NAR) and $250 million from Berkshire Hathaway (BRK-A) Energy’s HomeServices of America, which are set for final hearings in November.

The NAR and the real estate firms also agreed to changes in business practices that home sellers and buyers across the country allege are anticompetitive. The NAR, for example, will no longer require a broker listing a home for sale on the group’s MLS databases to offer any compensation to a buyer’s agent.

Read more here.

Stocks opened mixed on Thursday after a batch of lackluster earnings reports.

The Dow Jones Industrial Average (^DJI) dropped roughly 0.2%, indicating a reversal from the its six-day winning streak. The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) rose just above the flatline.

In corporate earnings news, downbeat annual revenue forecast from Arm (ARM) sent shares of the chip designer lower by more than 9%. Sector peers Nvidia (NVDA) and AMD (AMD) opened slightly lower.

Warner Bros. Discovery (WBD) shares fell 3% after the company reported first quarter earnings that missed expectations on both the top and bottom lines. The media giant said it's "hopeful" for a deal with the NBA amid concerns the company may be at risk of losing media rights for the league to competitor NBCUniversal (CMCSA).

On the macroeconomic front, initial jobless claims jumped to 231,000 last week, their highest level since August. The Department of Labor print is another sign of a slowing jobs market following last month's jump in unemployment to 3.9%.

The data raises investors' expectations that the Federal Reserve will indeed have to cut rates this year to support the labor market.

Weekly unemployment claims hit their highest level in nine months last week, surprising Wall Street and furthering signs that a red-hot labor market to start 2024 may be cooling.

Initial weekly jobless claims hit 233,000 in the week ending May 4, the highest level since August 2023 and well above the 212,000 economists had expected, per Bloomberg data.

But given claims have been low for much of the year, including in recent weeks, economists were hesitant to overreact to one week of data in a historically volatile series of economic data.

"We do not think that this is necessarily a sign of rapidly deteriorating conditions in the labor market," Jefferies US economist Tom Simons, who had been projecting a labor market slowdown at some point this year, wrote in a research note following the report.

He added: "The prints of the previous two weeks were the lowest for initial claims since mid-February, and claims remain locked in an improbably tight range for the last few weeks in the interim. They were bound to break at some point."

Oxford Economics lead US economist Nancy Vanden Houten said that given the surprise uptick, it will be important to follow the data series in the weeks ahead.

"If the higher level of claims persists or if claims rise further, it would be a sign of a further loosening in labor market conditions," Vanden Houten wrote in a note following. the release. "However, one week of data doesn't change our call for the Fed to keep interest rates at current levels until September."

Tapestry (TPR) shares are getting hit premarket after earnings.

Lots to unpack here, but this line jumped off the earnings release for me. It comes after several quarters of strength for the maker of Coach, Kate Spade and Stuart Weitzman accessories [emphasis added]:

"Realized a 3% decline in North America compared to the prior year, amid a challenging consumer backdrop."

Hopefully you have May 15 off from work — the latest Consumer Price Index will be reported premarket and could trigger all sorts of market volatility.

I am sort of saying this tongue-in-cheek, sort of.

Nonetheless, the report is likely to show still elevated food prices for American shoppers. In large part those high prices are being found at the country's grocery stores.

So I put this simply question to Whole Foods CEO Jason Buechel at the Milken conference this week: Is there any relief coming in food prices?

Buechel told me he is working double time to ease the food shopping pain continuing to hammer households.

"I mean, this has obviously been on the minds of customers for a while now," Buechel said. "One of the things that we have been doing is working with all of our suppliers to find ways to minimize this impact. There are a number of ways that we have been doing this. One, we have increased the number of promotions for our customers, and as a result, we have actually seen double-digit [percentage] unit growth on promotional items."

Buechel continued, "We have also been putting some price investments in for our 365 items [private label]."

To say inflation at the supermarket has been on the minds of consumers may be an understatement — it may end up deciding the presidential election in November.

The cost of groceries increased by 1.2% in March, according to the latest CPI data out of the Bureau of Labor Statistics (BLS). It marked the first month of year-over-year acceleration in US grocery prices since August 2022.

Dating back to the heights of the COVID-19 pandemic in March 2020, the cost of food at home has risen a startling 24.6%.

So I appreciate the discounts at Amazon-owned (AMZN) Whole Foods, Jason.

Full watch of our chat below.

Robinhood (HOOD) is getting a nice premarket pop after earnings last night.

The bears would say the first quarter is the high-water mark for Robinhood on the back of strong crypto trading volumes (crypto sales +232% year over year in the quarter). However, the realists would see a company that has come a long, long way from the meme stock insanity.

The company's new credit card is being released out into the wild, expenses are well under control, and the platform is really starting to suck in retirement assets from competitors.

Coming later this year will be index options.

I'm not on board with Bernstein's call this morning that Robinhood could double sales by the end of 2025. But, I could see how the company may prove me wrong.

Tune in to Yahoo Finance in the 3 p.m. ET hour for my chat with Robinhood co-founder and CEO Vlad Tenev.