Wall Street closed mixed on Thursday, driven by discretionary stocks. Treasury yields declined from three-month highs to provide some relief to the markets. Two of the three most widely followed indexes closed the session in the green, while one closed in the red.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) ticked down 140.59 points, or 0.3%, to close at 42,374.36. Nineteen components of the 30-stock index ended in negative territory, while 11 ended in positive.

The tech-heavy Nasdaq Composite gained 138.83 points, or 0.8%, to close at 18,415.49.

The S&P 500 advanced 12.44 points, or 0.2%, to close at 5,809.86. Five of the 11 broad sectors of the benchmark index closed in the green. The Materials Select Sector SPDR (XLB), the Health Care Select Sector SPDR (XLV) and the Utilities Select Sector SPDR (XLU) fell 1.2%, 0.7% and 0.7%, respectively, while the Communication Services Select Sector SPDR (XLC) rose 3.2%.

The fear-gauge CBOE Volatility Index (VIX) decreased 0.8% to 19.08. A total of 11.1 billion shares were traded on Thursday, lower than the last 20-session average of 11.6 billion. Advancers outnumbered decliners by a 1.25-to-1 ratio on the NYSE, while the Nasdaq Composite recorded 76 new highs and 89 new lows.

Tesla (TSLA) Earnings Trigger a Discretionary Rally

Tesla, Inc. TSLA reported third-quarter earnings of 72 cents per share, beating the Zacks Consensus Estimate of 58 cents. This compares to 66 cents per share a year ago and an earnings surprise of 24.14%.

However, a quarter ago, it was expected that the EV-maker would post earnings of 62 cents per share when it reported 52 cents, with the surprise being a negative 16.13%. Over the last four quarters, the company surpassed consensus EPS estimates just once. The company’s performance in this quarter, thus, was way beyond expectations. Tesla’s shares soared 21.9%. This triggered a rally in consumer discretionaries in general on an otherwise muted day for trade.

Consequently, shares of Caesars Entertainment, Inc. CZR and PulteGroup, Inc. PHM rose 2.1% and 2%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Treasury Yields Recede to Provide Relief

The benchmark U.S. 10-year treasury yield slid more than 3 basis points (bps) to 4.208%, while the 2-year Treasury fell more than 1 bp to 4.072% on Thursday. For the 10-year treasury note, the yield came down from a three-month high, providing some relief to investors reeling under the apprehension of higher interest rates.

Economic Data

The Labor Department said on Thursday that initial jobless claims were 227,000, decreasing by 15,000 for the week ended Oct. 19 from the previous week’s revised level. The prior week’s number was revised up by 1,000 to 242,000. The four-week moving average was 238,500, marking a rise of 2,000 from the previous week’s revised average. The prior week's average was revised up by 250 from 236,250 to 236,500.

Continuing claims came in at 1,897,000 for the week ended Oct. 12, increasing by 28,000 from last week’s revised level. The previous week's level was revised up by 2,000 from 1,867,000 to 1,869,000. The four-week moving average was 1,860,750, an increase of 17,500 from the prior week's revised average. Last week's average was revised up by 500 from 1,842,750 to 1,843,250.

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that new home sales in September 2024 were 738,000. The number for August was revised down to 709,000 from the previously reported 716,000.

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