This post was originally published on this site
U.S. stock benchmarks traded higher Thursday morning, despite a report showing weekly jobless benefit claims rising to the highest level since last August as business lockdowns were imposed again in some states to combat the coronavirus pandemic.
Investors, however, are focused on the prospects of further financial aid from the government with President-elect Joe Biden set to lay out details of more fiscal stimulus Thursday evening..
What are major benchmarks doing?
- The Dow Jones Industrial Average DJIA, +0.35% rose 108 points, or 0.3%, to 31,164.
- The S&P 500 index SPX, +0.20% was trading 8 points, or 0.2%, higher at 3,817.
- The Nasdaq Composite Index COMP, +0.42% was climbing 40 points, or 0.4%, at 13,171.
The Dow DJIA, +0.35% fell less than 0.1% Wednesday just ahead of a House vote to impeach President Donald Trump for inciting the Jan. 6 Capitol riot, while the S&P 500 SPX, +0.20% and Nasdaq Composite COMP, +0.42% ended slightly higher.
What’s driving the market?
CNN reported that Biden, who is due to speak in Wilmington, Del., is prepared late Thursday to outline a spending package that would include more direct payments to American families and significant state and local funding.
Another round of large, direct payments to households could be the trickiest part of the package, said Hussein Sayed, chief market analyst at FXTM, in a note, because most Republicans and some Democrats in the Senate are against “going too big.”
“On the other hand, opting for a small package will disappoint investors and lead to profit-taking in equity markets,” he said. “Finding the right balance will not be easy.”
Talk of additional federal spending comes as a report on U.S. weekly jobless benefit claims in early January were the highest since late August, rising by 181,000 to 965,000 as the COVID-19 pandemic has caused renewed lockdowns across the country, the Labor Department reported Thursday. Economists on average had estimated that claims would come in at 800,000.
The U.S. added at least 230,476 new cases on Wednesday according to a New York Times tracker , and counted at least 3,922 deaths, after setting a record of more than 4,400 on Tuesday, the most in a single day since the start of the outbreak.
The higher jobless benefit claims figures for early January, however, may help bolster the argument among those who make the case that the economy needs more fiscal help as the virus stages a fresh spread.
“At a certain point tough jobs numbers like we saw this morning can serve as the tinder for those calling for a correction, but the market’s view seems to be that the light at the end of the tunnel remains in sight, despite a plodding vaccination rollout,” wrote Mike Loewengart, investment strategist at E-Trade Financial, in emailed comments.
“Further, a bleaker than excepted jobs report translates into a greater likelihood for a full-throated stimulus package, which perversely acts as a tailwind for the market,” he said.
Optimism for new aid has supported bullish predictions for the market’s performance in 2021. Indeed, Goldman Sachs’ David Kostin projects that the S&P 500 will end 2021 at 4,300.
Meanwhile, investors will also be keeping an eye on bond yields, which ticked higher last week and early this week in a move blamed on worries that another fiscal package could fuel inflation. That could spell trouble for stocks, as higher yields make higher stock-market valuations tougher to justify. Investors could also fret that a pickup in inflation would see the Federal Reserve relax its bond-buying program more quickly than expected.
In other economic news, U.S. import price index rises 0.9% in December, and 0.4% in December, excluding fuel prices.
Investors will also pay close attention to a speech by Fed Chairman Jerome Powell at 12:30 p.m. Eastern.
Which companies are in focus?
- BlackRock Inc. BLK, -2.40% shares fell 3.7% , after the asset manager, with $8.7 trillion in assets under management, reported fourth-quarter profit and revenue that beat expectations.
- Shars of Tesla Inc. TSLA, +0.09% were 1.2% lower. The National Highway Traffic Safety Administration sent a letter to the electric-vehicle maker seeking a voluntary recall of 158,000 Model X units from the 2016, 2017 and 2018 model years over a possible defect impacting safety functions including rear-view-camera operation.
- Google parent Alphabet Inc. shares GOOG, +0.72% GOOGL, +0.71% may be in focus after the company said it completed the acquisition of fitness-tracking company Fitbit. Alphabet’s Class A and C shares were up 0.4%.
- Cisco Systems’ CSCO, -0.19% stock was in focus after CNBC reported that it was proposing a higher bit forAcacia Communications ACIA, +31.51%. Cisco shares were off 0.3%, while Acacia’s stock surged 31%.
How are other assets trading?
- The yield on the 10-year U.S. Treasury note TMUBMUSD02Y, 0.157% was flat at around 1.09%.
- The ICE U.S. Dollar Index DXY, +0.19%, a gauge of the currency against a basket of six major rivals, was up 0.3%.
- Oil futures were trading lower, with the U.S. benchmark CL.1, -0.09% 0.7% lower at $52.54 per barrel. Gold futures GC00, -0.56% were trading 0.6% lower at $1,843.70 an ounce.
- The pan-European Stoxx 600 index SXXP, +0.64% was rising 0.4% higher, while London’s FTSE 100 UKX, +0.58% was up 0.5%.
- In Asia, the Shanghai Composite SHCOMP, -0.91% closed 0.9% lower, while Hong Kong’s Hang Seng Index HSI, +0.93% climbed 0.9% and Japan’s Nikkei 225 index NIK, +0.85% gained 0.9%
