us stocks advanced on thursday as investors in richlyvalued technology companies attempted to shake off worries about the outlook for interest rates ahead of next weeks federal reserve policy meeting on wednesday the nasdaq shed 172 points or 129 its biggest daily drop since april 25 when the index fell roughly 2 according to factset data the pullback has put the techheavy index on track to snap a sixweek winning streak stocks were climbing thursday with the nasdaq bouncing back after weekly data on jobless claims showed claims jumped to a 21month high of 261000 an increase of 28000 from the prior week updates on the labor market and inflation continue to be frontandcenter ahead of the federal reserves coming june 1314 meeting where a skip or pause on raising interest rates is widely expected to allow the feds earlier rate increases more time to slow the economy we believe inflation will continue to moderate but remain above 3 through yearend and unemployment will trend higher to a still reasonable 45 said asawari sathe a vanguard senior economist in a client note in that scenario the fed cutting its policy rate this year is unlikely the jobless claims data however tempered some concerns about the potential impact on growth stocks if the federal reserve keeps borrowing costs higher for longer the sp 500s information technology sector was up 1 thursday the nasdaq fell wednesday after a surprise interest rate hike by the bank of canada the index was still up 26 on the year and logged its highest closing level since april 2022 earlier in the week the boc hike helped refocus investors on the outlook for fed policy it came after the reserve bank of australia on tuesday delivered a second rate hike after ending a pause of its own seewhy us stockmarket investors were rattled by the bank of canadas surprise rate hike right now the market feels reasonably comfortable that the expectation is for the fed to stay put where it is for interest rates and not raise rates again said yungma bmo wealth managements chief investment strategist in a client note we think thats the most likely scenario we think a lot of the interest rate increases that already happened have yet to really play out through the economy away from the big three equity indexes the russell 2000  a gauge of smallcap stocks pulled back on thursday but was still on pace for big weekly gains recent strength in small caps has signaled that the us market might be on the verge of a sea change said sam stovall chief investment strategist at cfra in a phone interview with marketwatch investors are being encouraged by what has been going on in the market since the beginning of june stovall said weve been seeing a broadening of participation in the rally with small caps and value stocks joining in small caps have led the way on a monthtodate basis as well he added hardhit regional bank stocks like those included in the spdr sp regional banking etf kre have been a key contributor to this trend as confidence has returned to the us banking sector after three banks failed in march the etf was trading lower on thursday but was up 13 on the monthtodate there have been indications that some of these regional banks are looking to sell off some of their commercial real estate loan portfolios which have been troubling people and causing concern about them staying on their balance sheets ma at bmo wrote hopes that the fed will refrain from raising interest rates again next week also helped lift bank stocks as investors bet that the treasury yield curve could flatten said jj kinahan chief executive of ig north america owner of brokerage firm tastytrade in a phone interview the yield on the 2year treasury note has been higher than that of the 10year treasury note for more than 230 trading sessions the longest stretch since the early 1980s according to factset data markets show investors pricing in a 68 probability the fed will leave interest rates unchanged at a range of 5 to 525 on june 14 however the chances of an additional 25 basis point rate increase in july has risen to 53 up from just 10 a month ago according to the cmes fedwatch tool investors will receive an update on the pace of consumerprice inflation in the form of the consumerprice index for may which is set to be released on june 12 when the feds twoday policy meeting begins this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal