U.S. stock benchmarks traded higher Thursday morning, and the Dow broke an intraday record, despite a report showing weekly unemployment benefit claims, which have risen to the highest level since last August when business closures were reintroduced in some states for to combat the coronavirus pandemic.
However, investors are focused on the prospect of further financial support from the government with President-elect Joe Biden set to post details of more fiscal stimulus on Thursday night.
What do the big benchmarks do?
Dow Jones industrial average DJIA
rose 144 points or 0.5% to 31,203 and touched an intraday record of 31
The S&P 500 Index SPX
traded 12 points or 0.3% higher at 3,822.
Nasdaq Composite Index COMP
climbed 74 points or 0.6% at 13,203.
fell below 0.1% on Wednesday just ahead of a vote in Parliament to accuse President Donald Trump of inciting the Capitol uprising on January 6, while the S&P 500 SPX
and Nasdaq Composite COMP
ended a little higher.
What drives the market?
CNN reported that Biden, who is due to speak in Wilmington, Del., Is preparing late Thursday to outline a spending package that will include more direct payments to U.S. families and significant state and local funding.
Another round of large direct payments to households could be the hardest part of the package, Hussein Sayed, chief market analyst at FXTM, said in a note because most Republicans and some Democrats in the Senate are against “going too big.”
“On the other hand, choosing a small package will disappoint investors and lead to profits in the stock markets,” he said. “It’s not easy to find the right balance.”
Talk of further federal spending comes as a report on U.S. weekly unemployment benefit claims in early January was the highest since late August, rising 181,000 to 965,000 as the COVID-19 pandemic has caused renewed lockdowns across country, the Labor Department reported Thursday. Economists had, on average, estimated that claims would come in at 800,000.
The U.S. added at least 230,476 new cases Wednesday, according to a New York Times tracker, and counted at least 3,922 deaths after setting a record more than 4,400 on Tuesday, the most in a single day since the outbreak began.
However, the figures for higher unemployment benefits for early January may help bolster the argument among those who argue that the economy needs more fiscal help as the virus introduces a new spread.
“At some point, hard job numbers, as we saw this morning, may serve as a pinnacle for those who demand a correction, but the market view seems to be that the light at the end of the tunnel remains in sight despite a powerful vaccination, ”wrote Mike Loewengart, investment strategist at E-Trade Financial, in email comments.
“Furthermore, a more in – depth than exempt job report translates into a greater likelihood of a complete stimulus package, which perversely acts as a tailwind for the market,” he said.
Optimism for new support has supported bullish predictions for market performance in 2021. Goldman Sachs’ David Kostin actually predicts that the S&P 500 will end 2021 at 4,300.
Meanwhile, investors will also keep an eye on bond yields, which ticked higher last week and early in the week in a move due to concerns about another fiscal package giving rise to inflation. This can spell trouble for stocks as higher interest rates make higher valuations in the stock market harder to justify. Investors could also worry that a rise in inflation would see the Federal Reserve relax its bond buying program faster than expected.
In other economic news, the US import price index rose by 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 Eastern.
Which companies are in focus?
equities fell 3.7% after the $ 3.7 trillion asset manager reported assets and earnings in the fourth quarter that exceeded expectations.
Shars off Tesla Inc.
was 1.2% lower. The National Highway Traffic Safety Administration sent a letter to the manufacturer of electric cars seeking a voluntary recall of 158,000 Model X devices from the 2016, 2017 and 2018 model years over a possible defect affecting safety features, including rear camera operation.
Google parent Alphabet Inc. shares GOOG
may be in focus after the company said it completed the acquisition of fitness tracking company Fitbit. The alphabet’s A and C shares rose 0.4%.
the stock was in focus after CNBC reported that it was proposing a higher bit forAcacia Communications
Cisco shares were up 0.3%, while Acacia’s stock was up 31%.
Shares in Virgin Galactic SPCE
jumped over 20% after ARK Investment Management filed with the Securities and Exchange Commission to launch an exchange-traded fund for space research.
How do other assets trade?
The yield on the 10-year US government bond BX: TMUBMUSD02Y
increased 1 basis point by 1.10%.
ICE US Dollar Index DXY,
a measure of the currency against a basket of six major rivals rose 0.2%.
Oil futures traded lower with the US benchmark CL
0.3% lower to $ 52.77 per. Barrel. Gold futures GC00
traded 0.6% lower at $ 1,843.70 an ounce.
The Pan-European Stoxx 600 Index XX: SXXP
rose 0.4% higher while London’s FTSE 100 UK: UKX
In Asia, Shanghai Composite is CN: SHCOMP
closed 0.9% lower, while Hong Kong’s Hang Seng Index HK: HSI
rose 0.9% and Japan’s Nikkei 225 index JP: NIK