Dow, Nasdaq hit document highs as focus turns to Biden’s stimulus speech
© Reuters. FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange, in New York City
By Devik Jain and Medha Singh
(Reuters) – The Dow and the Nasdaq hit record highs on Thursday in anticipation of President-elect Joe Biden’s pandemic aid proposal to jump-start a struggling economy after data highlighted weakening labor market conditions.
The Labor Department’s weekly jobless report showed the number of Americans filing first-time claims for unemployment benefits increased more than expected last week, underscoring the impact of a resurgence in COVID-19 infections.
However, the rose for the seventh time in nine sessions this year as investors count on Biden to unveil during a prime-time address on Thursday evening a stimulus plan that could exceed $1.5 trillion.
“We’re really focused on the stimulus measures so we largely ignored the fact that we also had a really big spike in jobless claims,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, California.
“Perhaps it’s back to bad news is good news situation where market expects that deteriorating economic data will motivate lawmakers to issue even more stimulus.”
Delta Air Lines (NYSE:) gained 3.6% as Chief Executive Ed Bastian forecast 2021 to be “the year of recovery” after the coronavirus pandemic prompted its first annual loss in 11 years.
The S&P 1500 airlines index added 3.3%.
Eight of the 11 major S&P sectors rose with economy-linked energy, financial and industrials among the biggest gainers.
The domestically-focused small-cap , as well as the Dow Jones Transports index, considered a barometer of economic health, both scaled all-time highs.
Analysts have said near-term political uncertainties in Washington, a relentless rise in coronavirus cases and a slower than expected rollout of vaccines could impede gains for equities in the short term.
Meanwhile, President Donald Trump became the first president in U.S. history to be impeached twice when the House voted 232-197 on Wednesday to charge him with inciting riots at the Capitol. The impeachment proceedings threaten to hang over the beginning of Biden’s term.
“With the current political situation, which is Biden and the Democratic Senate, it seems like there’s really not going to be a whole lot that can deter the rally from continuing,” Gokhman said.
“I don’t think the delay (in fiscal aid) of a few weeks due to impeachment trial is necessarily going to derail the further economic boost that we’re going to get from the stimulus.”
At 11:40 a.m. ET the rose 115.85 points, or 0.37%, to 31,176.32, the S&P 500 gained 6.29 points, or 0.17%, to 3,816.13 and the climbed 55.56 points, or 0.42%, to 13,184.51.
U.S.-listed shares of Taiwan Semiconductor Manufacturing Co Ltd surged 12% after the company posted its best-ever quarterly profit and raised revenue and capital spending estimates to record levels.
The Philadelphia semiconductor index jumped 3% to a record high.
Attention is shifting to the earnings season with results from JPMorgan (NYSE:), Citigroup (NYSE:) and Wells Fargo (NYSE:) slated for Friday.
First-quarter and 2021 corporate guidance will be key for investors as new lockdowns threaten to push back a recovery in corporate earnings, according to investment banks.
Advancing issues outnumbered decliners by a 2.9-to-1 ratio on the NYSE and the Nasdaq.
The S&P 500 posted 38 new 52-week highs and no new low, while the Nasdaq recorded 492 new highs and seven new lows.