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Nasdaq surges more than 1% in third straight positive session as Tesla shares pop

The Nasdaq Composite rose Thursday as Tesla shares climbed on the back of better-than-expected earnings results. Tech stocks also got a boost from a softer U.S. dollar.

The tech-heavy Nasdaq gained 0.9% during an up-and-down session. The S&P 500 gained 0.5%. Meanwhile, the Dow Jones Industrial Average lost 18 points, or 0.1%.

Investors continued to pivot into tech stocks, which have fueled this week’s rally, as some strong corporate results had Wall Street on the hunt for beaten-down assets.

“What you’re seeing in the market today is continued potential recovery, some continued potential optimism for numbers not being as bad as feared,” said Robert Cantwell, portfolio manager at Upholdings. “But that’s been happening in the market now for almost a month.”

Tesla shares surged 9% after the automaker reported stronger-than-expected earnings despite shrinking automotive gross margins. Shares are still down more than 20% this year.

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Meanwhile, the dollar declined following a surprise interest rate hike Thursday from the European Central Bank, which raised rates for the first time in 11 years. The central bank increased benchmark rates by 50 basis points.

A weakening dollar could boost shares of tech companies, as several major companies in the space get a chunk of their revenues from outside of the U.S.

Despite those moves, some investors continued to point to weak economic reports and other disappointing second-quarter results as indicators that markets have yet to bottom as inflationary pressures persist.

“If overall financial conditions keep tightening on the current path, then that means that macro fair value for US equities will continue to trend lower,” said Huw Roberts, head of analytics at Quant Insight.

The Philadelphia Fed manufacturing index registered a reading of -12.3, worse than the 1.6 estimate from the Dow Jones.

Meanwhile, initial jobless claims continued their upward trend and touched their highest level since November 2021. Initial claims climbed to 251,000 for the week of July 16, up from an adjusted 244,000 claims from the prior week, in its third straight weekly gain.

AT&T, American Airlines earnings

AT&T dropped 7% after lowering its full-year free cash flow guidance. Still, the telecommunications company exceeded expectations in its second quarter.

American Airlines fell 8% after cutting back on growth plans despite reporting earnings mostly in line with expectations. Still, the company forecasted a profit in the third quarter.

United Airlines’ results came in below expectations, pushing the stock down more than 9%.

Carnival dropped more than 14% after the cruise company announced that it was selling an additional $1 billion of stock.

Snap is expected to report after the bell.

Roughly 18% of S&P 500 have reported earnings for the second quarter. Of those companies, about 71% have beaten expectations, according to FactSet.

Thursday’s moves come as Wall Street is enjoying a July rebound. All three major averages hit their highest levels in more than a month during Wednesday’s session, with the S&P 500 reaching its best closing level since June 9.

The Nasdaq Composite is set for a gain this week, up about 4.5% for the week. Meanwhile, the Dow is nearly 1.6% higher for the week, while the S&P 500 has gained 2.8% thus far.

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