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Nasdaq Closes Above 11,000 as Markets Look to Aid Package

Nasdaq Closes Above 11,000 as Markets Look to Aid Package
(Daniel Kaesler/Dreamstime)

Thursday, 06 August 2020 04:32 PM

Shares on Wall Street shrugged off a sluggish start and closed higher on Thursday, with the Nasdaq ending the session above 11,000 for the first time as investors hoped for a new fiscal stimulus package.

Tech and tech-related heavyweight stocks such as Apple , which rose 3.49% and Facebook, up 6.49% helped pace gains on the indexes. The tech-heavy Nasdaq clinched a new record high in early trading, and closed above the 11,000-mark for the first time after initially climbing above it on Wednesday.

The benchmark S&P 500 and blue-chip Dow were about 1% and 7% away from their own peaks scaled in February.

"Markets have been incredibly resilient, there is a big fear of missing out and it is the old stalwarts, the technology leaders that keep driving the market higher," said Sal Bruno, chief investment officer at IndexIQ in New York.

Economic data released on Thursday painted a mixed picture as U.S. Labor Department numbers showed a first fall in jobless claims in three weeks, although a separate report showed a 54% surge in job cuts announced by employers in July. The data comes ahead of the government payrolls report on Friday.

Investors are looking to the next fiscal aid package to further cope with fallout from the COVID-19 pandemic. But Senate Majority Leader Mitch McConnell said on Thursday Republicans and Democrats remained far apart over what to include in another wave of relief.

Senate Republicans have been told that negotiators have until Friday to reach agreement. "If there's not a deal by Friday, there won't be a deal," Republican Senator Roy Blunt told reporters on Wednesday.

"I’m not sure people are taking the drop dead date seriously because most people probably view that as a negotiating ploy and people realize the government is going to have to do something," said Bruno.

The Dow Jones Industrial Average rose 185.46 points, or 0.68%, to 27,386.98, the S&P 500 gained 21.39 points, or 0.64%, to 3,349.16 and the Nasdaq Composite added 109.67 points, or 1%, to 11,108.07.

Ahead of the deadline for a new stimulus package, the focus now shifts to the July jobs report Friday morning, with analysts forecasting a rise of 1.58 million new jobs last month and a decline in the unemployment rate to 10.5%.

As major averages continue to rally off their March lows, powered by heaps of fiscal and monetary stimulus and better-than-feared second-quarter earnings, the Dow and S&P notched their fifth straight daily gain, with the Nasdaq climbing for a seventh consecutive session.

The corporate results season is now in its final stretch, with about 424 S&P 500 firms having reported so far. Earnings have been about 22.5% above analyst expectations, according to IBES Refinitiv data, the highest on record since 1994.

Communication services and technology were the best performing of the 11 major S&P sectors on the day.

Among individual shares, Becton Dickinson and Co dropped 8.40% after posting quarterly revenue below estimates as delayed elective procedures during coronavirus-led lockdowns squeezed demand for some of its devices.

Western Digital sank 16.12% after the hard drive maker reported weaker-than-expected fourth-quarter revenue and forecast a soft current quarter.

Bristol-Myers Squibb Co gained 2.75% after the drugmaker raised its annual profit forecast on hopes of a recovery in demand for its hospital-administered drugs.

ViacomCBS Inc climbed 3.35% after beating analysts' estimates for quarterly revenue due to high demand for streaming.

Advancing issues outnumbered declining ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored decliners.

The S&P 500 posted 27 new 52-week highs and no new lows; the Nasdaq Composite recorded 151 new highs and 5 new lows.

About 9.69 billion shares changed hands in U.S. exchanges, compared with the 10.39 billion daily average over the last 20 sessions. 

GLOBAL MARKETS

Global equity markets edged higher and bond yields eased off earlier lows on Thursday as investors awaited word on a new U.S. aid package to counter economic fallout from the coronavirus crisis.

Safe-haven gold extended its record-breaking run, driven by expectations of more stimulus, while the dollar initially gained after data showed fewer Americans sought jobless benefits last week. Gold has been rising on concerns stimulus will fuel inflation and erode the value of the dollar.

Initial claims for state unemployment benefits fell 249,000 to a seasonally adjusted 1.186 million for the week ended Aug. 1, the U.S. Labor Department said, the lowest reading since mid-March.

Revised data for June showing payrolls jumped by 4.314 million jobs instead of adding 2.369 million as previously estimated cheered investors who see a stronger economy than those who fear the economic impact of a surge in COVID-19 cases.

A proper economic recovery is still far away, said Jeffrey Christian, managing partner of CPM Group.

"There are mixed signals that the economy is recovering and some of the signs of recovery are relatively superficial as they show aggregate figures and not how medium and small enterprises continue to suffer," Christian said.

More than 1 million initial claims a week is not desirable if you think the economy is recovering, said Yousef Abbasi, global market strategist at StoneX Group Inc in New York. The report, he said, supports the need for stimulus.

"It puts us right where the Fed wants to be, right where you'd want to be, if you're thinking Washington needs to get stimulus done," Abbasi said. "You don't want them to be too encouraged by better data to slow their approach."

Republicans and Democrats remained far apart about what to include in another wave of relief after nearly two weeks of talks on next steps to address a crisis that has killed more than 157,000 Americans and thrown tens of millions out of work.

The relief bill should be more targeted than the first to preserve ammunition if another shutdown should require further aid, former Reserve Bank of India Governor Raghuram Rajan told the Reuters Global Markets Forum on Wednesday.

The major U.S. stock indices traded little changed, but bourses in Europe fell as a three-day rally ran out of steam.

The pan-European STOXX 600 fell 0.73% and London's FTSE 100 closed down 1.27%, pulled lower after Glencore scrapped its dividend. Europe's mining index fell 2.45%.

MSCI's benchmark for global equity markets rose 0.23% to 565.38.

Treasury yields fell, with the 10-year note sliding to 0.504% at one point, its lowest ever after a big down spike on March 9. The benchmark note last yielded 0.5379%, down just 0.5 basis points on the day.

The euro climbed to its highest against the dollar since May 2018 before paring some of its gains. The euro was up 0.13% to $1.1877.

The weak dollar/strong euro trend will continue into next year, a Reuters poll showed, on expectations the U.S. economic recovery is flagging, especially compared with Europe.

The dollar index ended the session essentially flat, while the Japanese yen strengthened 0.03% versus the greenback at 105.53 per dollar.

The British pound rose to a five-month high against the dollar after the Bank of England left interest rates at 0.1% and warned about possible risks from taking rates below zero.

Spot gold hit an all-time high of $2,069.21 an ounce and was up $24.1813, or 1.19%, to $2,063.58 an ounce. U.S. gold futures settled 1% higher at $2,069.40.

Oil prices hovered near five-month highs as support from a weak dollar and falling U.S. crude inventories countered bearish sentiment on fuel demand.

Brent crude futures settled down 8 cents at $45.09 a barrel. U.S. crude futures fell 24 cents to settle at $41.95 a barrel.

© 2021 Thomson/Reuters. All rights reserved.


StreetTalk
Shares on Wall Street shrugged off a sluggish start and closed higher on Thursday, with the Nasdaq ending the session above 11,000 for the first time as investors hoped for a new fiscal stimulus package.
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2020-32-06
Thursday, 06 August 2020 04:32 PM
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