By Mark DeCambre and Sunny Oh
U.S. stock benchmarks ended with modest losses on Thursday, turning negative in the final hour of trading, as investors focused on the prospects of further fiscal aid ahead of a speech by President-elect Joe Biden Thursday evening.
A report showing weekly jobless benefit claims rising to the highest level since last August, as business lockdowns were imposed again in some states to combat the coronavirus pandemic, suggests economic growth is stalling as 2021 begins, analysts noted .
The Dow /zigman2/quotes/210598065/realtime DJIA +1.95% fell less than 0.1% Wednesday just ahead of a House vote to impeach President Donald Trump for inciting the Jan. 6 Capitol riot, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +2.38% and Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +3.01% ended slightly higher.
President-elect Joe Biden will announce his coronavirus relief plan on Thursday evening, in what is billed as a sweeping measure expected to include items including cash payments to Americans and money for distributing COVID-19 vaccines as well as aid for states and local authorities.
Biden plans to detail his proposals in Wilmington, Del., at 7:15 p.m. Eastern , less than a week before being inaugurated as president, and a day after the House of Representatives voted to impeach President Donald Trump for a historic second time.
“Policymakers are going to have to build a bridge to help those less fortunate so we can get to those more normal time periods,” said Larry Adam, chief investment officer at Raymond James, in an interview.
Talk of additional federal spending comes as a report showed U.S. weekly jobless benefit claims in early January were the highest since last August , rising by 181,000 to 965,000 as the COVID-19 pandemic has caused renewed lockdowns across the country, the Labor Department reported Thursday. Economists on average had estimated that claims would come in at 800,000.
The higher jobless benefit claims figures for early January may help bolster the argument among those who make the case that the economy needs more fiscal help as the virus intensifies.
“At a certain point tough jobs numbers like we saw this morning can serve as the tinder for those calling for a correction, but the market’s view seems to be that the light at the end of the tunnel remains in sight, despite a plodding vaccination rollout,” wrote Mike Loewengart, investment strategist at E-Trade Financial, in emailed comments.
“Further, a bleaker than excepted jobs report translates into a greater likelihood for a full-throated stimulus package, which perversely acts as a tailwind for the market,” he said.
Optimism for new aid has supported bullish predictions for the market’s performance in 2021. Indeed, Goldman Sachs’ David Kostin projects that the S&P 500 will end 2021 at 4,300 .
Meanwhile, investors are also keeping an eye on U.S> Treasury yields, which surged higher last week and early this week in a move blamed on worries that another fiscal package could fuel inflation.
“Bond yields are rising for the right reasons. Investors are anticipating an improvement in economic data,” said Adam.
However, Fed Chairman Jerome Powell said Thursday it was unlikely inflation would stay persistently high, and that the central bank would not alter its monetary policy for the foreseeable future.
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