Wall Street ends higher as investors eye upcoming jobs data

© Reuters. FILE PHOTO: Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 31, 2023. REUTERS/Andrew Kelly

By Noel Randewich and Ankika Biswas

(Reuters) - Major U.S. stock indexes ended higher on Thursday, helped by a rally in Alphabet (NASDAQ:GOOGL) shares as investors, worried about a slowing economy, looked to upcoming jobs data.

Alphabet Inc rallied 3.8% and Microsoft (NASDAQ:MSFT) climbed 2.6%, with both providing more fuel than any other stocks for the S&P 500's gain for the session. Alphabet's Google unit plans to add artificial intelligence features to its search engine, the Wall Street Journal reported.

Adding to recent data hinting at a weak labor market, initial jobless claims fell to a seasonally adjusted 228,000 for the week ended April 1, versus expectations of 200,000 claims.

The Labor Department's data from the prior week was revised to show 48,000 more applications were received.

The S&P 500 climbed 0.36% to end the session at 4,105.02 points.

The Nasdaq gained 0.76% to 12,087.96 points, while the Dow Jones Industrial Average rose 0.01% to 33,485.29 points.

Wall Street has lost ground in recent days in response to signs of a slowing economy, including weak data on private payrolls and job openings earlier this week.

That marked a change from recent months, when investors cheered weak economic data on the basis that it might mean the Fed's interest rate hikes were working and that the Fed could ease up on its campaign to rein in decades-high inflation.

Interest rate futures imply traders are divided about whether the Fed will raise its target rate or keep it steady at its upcoming May meeting, according to CME Group's (NASDAQ:CME) Fedwatch tool.

"The market is trying to decide whether the 'growth and recession' scare or the 'Fed hiking' scare are more meaningful to prices, and so it's waffling between whether a softening labor market is good news because it gets the Fed to pause in May or bad news because it means the recession is actually coming," said Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky.

Investors are now focused on the more comprehensive report on non-farm payrolls, which are expected to have increased by 239,000 in March, down from the 311,000 jobs added in the prior month. That report is due on Friday, when the U.S. stock market will be closed for the Good Friday holiday.

S&P 500 components https://fingfx.thomsonreuters.com/gfx/mkt/akveqnqljvr/SPX_by_marketcap.png

Of the 11 S&P 500 sector indexes, eight rose, led by communication services, up 1.71%, followed by a 0.74% gain in utilities.

With some investors away during a shortened holiday week, volume on U.S. exchanges was relatively light, with 9 billion shares traded, compared to an average of 12.7 billion shares over the previous 20 sessions.

For the week, the S&P 500 declined 0.1%, the Dow added 0.6% and the Nasdaq lost 1.1%.

In Thursday's trading, Caterpillar (NYSE:CAT), viewed as a bellwether for the industrial sector, dipped 2%, bringing its loss over the past three days to 9% as investors fretted about a potential economic downturn.

AMC Entertainment (NYSE:AMC) Holdings Inc surged 21% after a U.S. court denied the theater operator's request to lift a status quo order necessary for its plan to convert preferred shares to common shares.

Levi Strauss & Co (NYSE:LEVI) tumbled 16% after the apparel maker posted a fall in quarterly profit.

Big banks including JPMorgan Chase & Co (NYSE:JPM) and Citigroup (NYSE:C) will be among companies kicking off the quarterly reporting season next week, with investors eager for updates on the health of the sector after a recent banking crisis.

Analysts on average expect aggregate S&P 500 company earnings for the first quarter to have fallen 5% year-over-year, according to Refinitiv I/B/E/S.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.2-to-one ratio.

The S&P 500 posted six new highs and no new lows; the Nasdaq recorded 46 new highs and 177 new lows.