The Dow Jones Industrial Average on Thursday booked a fourth straight gain, its longest run since late April, partly on the back of a burst higher in Boeing shares, but the broader market took a pause as investors found it difficult to push equity values demonstrably higher.
Overall sentiment over the past week has been boosted by efforts to restart the U.S. economy after business closures meant to combat the spread of the pandemic, and a report on weekly jobless claims did little to dissuade the bulls that equities have more room to run.
How did benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.44% ended 11.93 points, or less than 0.1%, higher at 26,281.82, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.77% fell 10.52 points, or 0.3%, to close at 3,112.35. The fourth gain matches a similar streak of wins for the blue-chip index ended April 27, according to FactSet data.
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.49% finished 67.10 points, or 0.7%, lower to wrap up the session at 9,615.81, putting the index about 2.1% from its Feb. 19 all-time closing high, according to Dow Jones Market Data. Both the S&P 500 and the Nasdaq ended a win streak at four consecutive days with the session’s loss.
Meanwhile, the Nasdaq-100 index /zigman2/quotes/210598364/realtime NDX +1.78% closed off 75.02 points, or 0.8%, at 9,629.66 after carving out a fresh all-time intraday peak at 9,741.97, surpassing its Feb. 19 intraday level.
What drove the market?
Although the S&P 500 index and the Nasdaq snapped a win streak, the underlying tendency of U.S. equity markets has been to drift higher.
While “it never feels comfortable” to see the stock market running ahead of the economy, said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research, in an interview with MarketWatch, that’s always been how markets work. “Investing is an act of optimism. That’s what the market is telling us: things are going to get better.”
Another 1.9 million U.S. workers applied for first-time unemployment benefits in the week ended May 30, a bit higher than the 1.8 million consensus among economists polled by MarketWatch. While grim, the data suggest that the economy may have seen the worst of the impact of the epidemic.
Offering some words of caution was Mark Tepper, president and CEO of Strategic Wealth Partners, who called the rise in continuing claims, to 21.5 million, “worrisome because it means people remained unemployed and didn’t return to work.”
Private-sector employment data on Wednesday showed that a total of 2.76 million jobs were lost in May, Automatic Data Processing Inc. reported, but that loss also was far less severe than the 8.66 million forecast by Econoday. That report is often considered an early look at the Labor Department’s payrolls data, due Friday.
In a separate report, the Commerce Department said the trade gap widened nearly 17% in April.
Equity benchmarks in the U.S. have recovered from their March 23 lows, partly on the back of optimism surrounding the reopening efforts and evidence of a slower spread of the deadly infection as the summer gets under way, though some worry that recent a flare-up in infections could still occur.
Trillions of dollars in stimulus from the Federal Reserve and the U.S. government, underpinning financial markets, also have helped to drive the value of assets sharply higher from their March lows. The European Central Bank’s announcement’s on Thursday also may have reinforced that view.
Europe’s policy makers delivered further stimulus to its battered economy. Led by Christine Lagarde, the ECB said it would expand its Pandemic Emergency Purchase Program by €600 billion, or $674.5 billion. The central bank also said it would extend the program until June 2021, and reinvest maturing PEPP securities until at least the end of 2022. In a news conference, Lagarde said the economy was showing signs of bottoming out, but called activity still “tepid” and said she expects the bloc’s economy to contract 8.7% in 2020.
Those steps come as German Chancellor Angela Merkel’s coalition agreed on a €130B economic stimulus package to boost consumer spending and business investment, according to Bloomberg News . Germany, which has a history of fiscal prudence, last month backed an agreement, along with France, for an upsized €750 billion coronavirus European Union-wide recovery fund.