NEW YORK (Reuters) – Wall Street gained ground on Thursday, with the Dow and Nasdaq briefly hitting all-time highs as investor hopes for a new fiscal stimulus ahead of President-elect Joe Biden’s pandemic aid proposal are been counteracted by the weakening of labor market conditions.
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. .
However, the S&P 500 rose for the seventh time in nine sessions 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.
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.
At 2:12 PM ET (1912 GMT), the Dow Jones Industrial Average was up 77.52 points, or 0.25%, to 31,137.99, the S&P 500 gained 4.95 points, or 0.13% , at 3,814.79 and the Nasdaq Composite added 37.77 points, or 0.29%, to 13,166.72.
Six of the 11 major S&P sectors rose with economically sensitive energy showing the largest percentage gains.
The domestic-focused small-cap Russell 2000, as well as the Dow Jones Transports Index, considered a barometer of economic health, have both climbed all-time highs.
Helping the transportation index was a 3.9% increase in Delta Air Lines after CEO Ed Bastian predicted 2021 would be “the year of recovery” after the coronavirus pandemic caused the its first annual loss in 11 years.
The S&P 1500 airline index added 4%.
President Donald Trump became the first president in US history to be indicted twice when the House voted 232-197 Wednesday to accuse him of inciting riots on the Capitol. The impeachment process threatens to suspend the start of Biden’s term.
While some investors worry about the impact impeachment procedures could on the stimulus boost, Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, California, downplayed these fears.
“I don’t think the delay (in tax aid) of a few weeks due to the impeachment process is necessarily going to derail the further economic boost we will get. from the stimulus, “he said.
The Philadelphia Semiconductor Index was up 2.9% and hit a record high with a big boost Taiwan Semiconductor Manufacturing Co Ltd. The chip maker’s US shares rose 9% after announcing its best quarterly profit and increased estimates of income and capital expenditure.
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.
Advance issues outperformed falling issues on the NYSE by a ratio of 2.99 to 1; on the Nasdaq, a ratio of 2.86 to 1 favored the promoters.
The S&P 500 made 45 new 52-week highs and no new lows; the Nasdaq Composite posted 325 new highs and three new lows.
Additional reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Marguerita Choy