Wall Street ends lower as investors weigh stimulus hopes and gloomy jobs data

NEW YORK (Reuters) – Wall Street closed lower Thursday as hopes of a new fiscal stimulus ahead of President-elect Joe Biden’s proposed pandemic aid were set against a weakening labor market.

The Department of Labor’s weekly unemployment report showed that the number of Americans filing unemployment insurance claims for the first time increased more than expected last week, highlighting the impact of a resurgence of COVID-19 infections. .

While the S&P 500 lost strength towards the end of the day, it spent part of the session in positive territory as investors were counting on Biden to present a stimulus plan Thursday night that could exceed $ 1.5 trillion.

“There is an ongoing tug-of-war between prospects for further fiscal stimulus, as a result of democratic Senate scrutiny, and a labor market that still has a long way to go before it heals,” said Emily Roland, co- chief investment strategist at John Hancock Investment Management. “There are these competing forces that keep markets limited.”

But Roland noted that disappointing jobs data could provide “additional fodder for Biden to potentially commercialize this plan.”

“Everyone is waiting to hear the details … Whether it’s $ 1 trillion or $ 2 trillion, that’s a huge amount of fiscal stimulus,” he said.

Citing two people familiar with the plans, The New York Times reported that Biden is expected to unveil a $ 1.9 trillion shopping package on Thursday.

As the S&P had gained ground earlier than the story, Robert Pavlik, a senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, suggested investors were selling on the news.

Investors also seemed reassured after US Federal Reserve Chairman Jerome Powell said an interest rate hike wouldn’t come anytime soon and dismissed suggestions that they could cut bond purchases anytime soon.

Unofficially, the Dow Jones Industrial Average fell 68.95 points, or 0.22%, to 30,991.52, the S&P 500 dropped 14.3 points, or 0.38%, to 3,795.54 and the Nasdaq Composite was down 16.31 points, or 0.12%, to 13,112.64.

Of the 11 major S&P sectors, economically sensitive energy showed the largest percentage gains as oil prices rose.

The small-cap Russell 2000 index focused on the domestic market, as well as the Dow Jones Transports index, considered a barometer of economic health, have both climbed to all-time highs.

Helping the transportation index was an increase in Delta Air Lines’ shares after CEO Ed Bastian predicted 2021 would be “the year of recovery” after the coronavirus pandemic triggered its first. annual loss over 11 years.

The S&P 1500 airline index has also skyrocketed.

This was after President Donald Trump became the first president in US history to be impeached twice when the House voted 232-197 Wednesday to accuse him of inciting riots on the Capitol.

While some investors worry that the impeachment process could delay the stimulus, Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, Calif., Downplayed these fears by saying it won’t “derail the additional economic push that we will get from the stimulus, “he said.

The Philadelphia semiconductor index also hit a record high with a strong push from Taiwan Semiconductor Manufacturing Co Ltd. The chipmaker’s US shares rose after announcing its best quarterly profit and raising its revenue and capital expenditure estimates.

Investors were also waiting for the earnings season to start in full swing with results from JPMorgan, Citigroup and Wells Fargo are scheduled for Friday.

According to investment banks, first-quarter and 2021 corporate guidance will be crucial for investors as new blocs threaten to fend off a recovery in corporate earnings.

Additional reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Marguerita Choy