Stocks were trading near the flat line early Thursday with the Dow struggling to build on its best two-day point gain since early March as investors digest the news of oil prices topping $50 per barrel for the first time since October and more data showing the U.S. economy is attempting to recover from a weak start to 2016.
The Dow Jones industrial average, which has rallied nearly 360 points the past two days, was down less than 0.1%. The broader Standard & Poor’s 500 stock index was up less than 0.1% and the technology-dominated Nasdaq composite was up 0.1%.
Wall Street is digesting a raft of economic news, all which came in better than expected and points to an economy that is not in as bad shape as feared, and which might even be getting better faster than expected. In addition to U.S.-produced crude trading above the $50 per barrel mark for the first time in more than seven months, fresh data on employment and spending on big-ticket, long-lasting items also came in much better than expected.
The number of Americans filing for unemployment benefits dropped 10,000 in the last week to 268,000. And sales of durable goods, driven in large part by sizable orders for commercial jets, soared 3.4% in April, surpassing estimates by a wide margin.
While the economic news is positive, it also has Wall Street thinking that it gives the Federal Reserve more reason to hike interest rates at its meeting next month, which appears to be capping gains in the stock market after a strong two-day rally.
“In sum, there is nothing here (in today’s data) that argues for the Fed to alter their gradual pace of rate hikes,” Chris Rupkey, chief financial economist at MUFG Union Bank, told USA TODAY via e-mail.
The big news, of course, is the rebound in prices of U.S.-produced crude, which got a lift from data released Wednesday that showed U.S. oil stockpiles fell by a wider margin than expected. In morning trading Thursday, oil was up 56 cents, or 1.1%, to $50.12 per barrel, slightly off its high for the day of $50.21.
Oil got a lift from a sharp 0.4% drop in the value of the U.S. dollar vs. a basket of foreign currencies. A weaker dollar is positive for crude as oil is priced in dollars.
West Texas intermediate crude is still down 66% from its record closing high of $145.31 a barrel on July 3, 2008, according to the Oil Price Information Service.
Stocks were mixed in Europe. The broad Stoxx Europe 600 was unchanged and Germany’s DAX index was 0.7% higher and the CAC 40 in Paris was up 0.6%.