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Stocks Rise, Snapping Three-Day Losing Streak

05/13/2021 | 02:35pm

By Anna Hirtenstein and Akane Otani

U.S. stocks soared Thursday, chipping away at losses after suffering their worst three-day decline since late October.

The moves marked a comeback for U.S. stocks after a jittery start to the week. Signs that inflation may be picking up faster than expected have put investors on edge, pressuring shares in the priciest corners of the market. Data earlier this week showed consumer prices surged higher in April, while a separate report Thursday said producer prices posted their biggest annual jump since the Bureau of Labor Statistics began tracking the data in 2010.

Investors' primary fear around inflation is that it may chip into companies' profit margins and force the Federal Reserve to unwind its easy monetary policies sooner than expected. But so far, central bank officials have said they expect any jump in inflation to be transitory. A Fed policy maker on Wednesday said more data would be necessary for the central bank to begin scaling back its policies.

The Dow Jones Industrial Average jumped 433.79 points, or 1.3%, to 34021.45, lifted by shares of everything from manufacturers to technology giants. The S&P 500 gained 49.46 points, or 1.2%, to 4112.50, and the Nasdaq Composite climbed 93.31 points, or 0.7%, to 13124.99.

In a sign of optimism, technology stocks, among the biggest decliners in the market selloff earlier in the week, bounced higher Thursday. Facebook rose $2.71, or 0.9%, to $305.26, while Alphabet gained $28.79, or 1.3%, to $2229.04.

"Market selloffs are a good time for people to buy into tech: for many investors, it's an opportunity to buy something that's been expensive and get a bit of a discount," said Salman Baig, a multiasset investment manager at Unigestion. "People are looking for a place to ride out the storm."

Still, some money managers said they remain wary. The jump in consumer prices has triggered debates about whether "inflation is actually more of an issue than we were led to believe, and whether the Federal Reserve is going to have to be a little bit more aggressive," said Dwyfor Evans, head of macro strategy for the Asia-Pacific region at State Street Global Markets.

In another sign that the economy is heating up, data released Thursday showed jobless claims fell to a new pandemic low last week. Claims for unemployment benefits have fallen substantially in recent months, although they remain more than twice as high as levels seen before the pandemic last spring.

McDonald's said it would raise pay for more than 36,500 hourly workers by an average of 10% over the next several months, responding to a shortage of workers across the U.S. Shares rose $1.83, or 0.8%, to $229.77.

In bonds, the market for U.S. Treasurys stabilized after a four-session selloff. The yield on the 10-year Treasury note, which moves inversely to prices, ticked down to 1.666% from 1.693% on Wednesday, backing away from its highest level in more than a month.

Bitcoin dropped 11% to about $48,600, according to CoinDesk, after Tesla Chief Executive Elon Musk said his company had suspended accepting the cryptocurrency as payment for vehicles due to its high carbon footprint. It earlier fell as low as $46,294.72, its lowest price since March 1.

Commodity markets were broadly lower. U.S. crude for June delivery slipped 3.4%,to $63.82 a barrel after the owner of the Colonial Pipeline said Wednesday that it had begun restarting operations following a cyberattack that shut down the main fuel conduit serving the East Coast.

Overseas, the pan-continental Stoxx Europe 600 fell 0.1%, paring earlier losses.

In Asia, most major equity benchmarks declined. Hong Kong's Hang Seng Index lost 1.8%. Indexes in South Korea, Japan, Australia and China also all retreated. Taiwan's benchmark Taiex shed 1.5%, declining for a fourth straight day. That put it in correction territory, meaning it has fallen at least 10% from a recent high.

In Tokyo, shares in SoftBank Group plunged by more than 7%, even after the technology investor reported the highest-ever annual profit for a Japanese company. In a note to clients, Jefferies analyst Atul Goyal said the lack of a new buyback plan was disappointing, after SoftBank concluded an earlier program totaling $23 billion.

-- Xie Yu contributed to this article

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

05-13-21 1635ET

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