By Sue Chang, MarketWatch , Ryan Vlastelica

First-time jobless claims fall by 7,000 in latest week

U.S. stocks rose on Thursday with major indexes on track to snap a multiday skid, following upbeat data on the labor market which may have momentarily offset jitters over inflation and rising bond yields. But the market trimmed gains in the afternoon session as financial stocks slid into negative territory, the lone S&P 500 sector to trade lower in an otherwise upbeat day.

What are the main benchmarks doing?

The Dow Jones Industrial Average gained 177 points, or 0.7%, to 24,960. The blue-chip index had been up by more than 300 points earlier. The S&P 500 added 2 points, or 0.1%, to 2,702 and the Nasdaq Composite Index turned negative, off 15 points, 0.3%, to 7,203.

Eight of the broad-market S&P 500's 11 sectors were trading higher on the day. Both the Dow and the S&P are coming off a two days of losses, while Thursday could be the Nasdaq's first positive session of the past four.

Read: MarketWatch's Need to Know column: Forget the Fed and just 'follow the money' to decipher what's happening in stocks (http://www.marketwatch.com/story/forget-the-fed-and-just-follow-the-money-to-decipher-whats-happening-in-stocks-2018-02-22)

What could drive markets?

On Wednesday, major indexes tumbled in the afternoon, surrendering gains that had the Dow up by 303 points at its peak (http://www.marketwatch.com/story/dow-futures-inch-lower-as-investors-brace-for-fed-minutes-2018-02-21). The losses followed the release of the minutes from the January Federal Open Market Committee meeting (https://www.federalreserve.gov/monetarypolicy/fomcminutes20180131.htm). The minutes showed that policy makers felt the U.S. economy is stronger than at the end of 2017 which some market observers took as a sign of more interest rate hikes, reinforcing prospects for a rate increase in March.

The news drove up the yield on the 10-year Treasury note to a fresh four-year high above 2.94%, and pushed the dollar higher.

Even though investors want to see an improving economy, they are demonstrating a heightened sensitivity to the prospect of accelerated inflation, rising interest rates, and higher bond yields ever since a recent reading on wages showed its fastest growth in years. The 10-year yield stayed relatively elevated at around 2.92%.

See:Higher inflation, tax-and-spend boom has investors looking for Fed clues (http://www.marketwatch.com/story/higher-inflation-trump-tax-and-spend-boom-leave-investors-looking-for-fed-clues-2018-02-17)

Which data and Fed speakers are in focus?

St. Louis Fed President James Bullard tried to tamp down the growing expectations of economists that the U.S. central bank will engineer four quarter-point rate increases this year. "The idea that we have to go 100 basis points in 2018, that seems like a lot to me (http://www.marketwatch.com/story/feds-bullard-casts-doubt-on-expectations-of-four-interest-rate-hikes-this-year-2018-02-22)," Bullard said in an interview on CNBC.

Earlier on Thursday, the Fed's vice chairman for supervision, Randall Quarles, said in Tokyo that recent low inflation readings aren't "a great concern (http://www.marketwatch.com/story/feds-quarles-says-low-us-inflation-readings-are-not-a-great-concern-2018-02-22)," and the economy is "performing very well."

Related:Puerto Rico should not despair despite seemingly grim outlook, Fed's Dudley says (http://www.marketwatch.com/story/puerto-rico-should-not-despair-despite-seemingly-grim-outlook-feds-dudley-says-2018-02-22)

Initial U.S. jobless claims fell by 7,000 (http://www.marketwatch.com/story/us-jobless-claims-drop-7000-to-222000-and-fall-back-to-45-year-low-2018-02-22) to 222,000 in the seven days ended Feb. 17, marking the second lowest level since the end of the 2007-2009 recession. Economists surveyed by MarketWatch had forecast claims to total 230,000. (http://www.marketwatch.com/story/feds-quarles-says-low-us-inflation-readings-are-not-a-great-concern-2018-02-22)

What are strategists saying?

"We're seeing a repricing of risk given the anticipation of inflation and higher rates, but some of that is a byproduct of an improving economy, one that's growing faster than normal. In general, the broader economic conditions continue to improve," said Steven Baffico, chief executive officer at Four Wood Capital Partners.

Typically financial stocks thrive during periods of higher rates but recently the sector has not reacted positively even as bond yields have jumped against the backdrop of sharp drops in the broader market, according to Frank Cappelleri, a technical strategist at Instinet LLC.

Which stocks are in focus?

Shares in Roku Inc.(ROKU) plunged 17% in heavy trading after the streaming-video company issued a disappointing outlook late Wednesday (http://www.marketwatch.com/story/roku-stock-plummets-despite-earnings-beat-as-forecast-disappoints-2018-02-21), along with better-than-expected quarterly earnings.

Read:Roku CEO says memory shortage affected earnings (http://www.marketwatch.com/story/roku-ceo-says-memory-shortage-damaged-earnings-2018-02-21)

Pandora Media Inc.'s stock (P) shed 7.5% after the music service late Wednesday posted stronger-than-expected quarterly revenue (http://www.marketwatch.com/story/pandora-stock-gains-as-fourth-quarter-revenue-beats-expectations-2018-02-21), although the adjusted net loss was wider than expected.

Car-rental giant Avis Budget Group Inc.(CAR) gained 15% after its better-than-anticipated results (http://www.marketwatch.com/story/avis-shares-rally-10-on-quarterly-beat-for-car-rental-company-2018-02-21).

Check out:Pandora's focus on adding subscribers is paying off, CEO says (http://www.marketwatch.com/story/pandoras-focus-on-adding-subscribers-is-paying-off-ceo-says-2018-02-21)

Cheesecake Factory Inc.(CAKE) was 3.9% higher even as its results late Wednesday revealed weaker-than-expected quarterly revenue (http://www.marketwatch.com/story/cheesecake-factory-shares-fall-after-companys-revenue-miss-2018-02-21).

Wayfair Inc. shares (W) sank 21% after the online home retailer reported a wider-than-expected fourth-quarter loss (http://www.marketwatch.com/story/wayfair-shares-sink-after-wider-than-expected-loss-2018-02-22).

Chesapeake Energy Corp.'s stock (CHK) surged 20% after the company topped earnings estimates for the fourth quarter (http://www.marketwatch.com/story/chesapeake-energy-shares-jump-7-premarket-after-earnings-top-estimates-2018-02-22). The stock was one of the biggest boosts to the energy sector, which rose more than 2% as one of the best-performing industries of the day on a percentage basis.

How are other assets performing?

European stocks mostly dropped, while Asian equities largely closed lower (http://www.marketwatch.com/story/asian-stocks-slide-following-wall-street-selloff-2018-02-21), though the Shanghai Composite Index jumped more than 2% in the first day of trading after the weeklong Lunar New Year holidays.

Gold prices (http://www.marketwatch.com/story/gold-prices-slip-as-dollar-strengthens-yields-rise-2018-02-22) settled mostly unchanged, while the dollar (http://www.marketwatch.com/story/dollar-fights-for-direction-as-10-year-treasury-yield-stay-below-3-2018-02-22), as gauged by the ICE U.S. Dollar Index , slid 0.3%.

--Barbara Kollmeyer and Victor Reklaitis contributed to this article

 

(END) Dow Jones Newswires

February 22, 2018 15:08 ET (20:08 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.