November 29, 2020

US stocks climb on revived stimulus optimism and lower jobless claims

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  • US stocks gained on Thursday amid revived hopes for near-term stimulus and jobless claims that declined week-over-week.
  • President Donald Trump indicated in a late Tuesday tweet that he backs a piecemeal strategy for passing smaller stimulus measures. The news boosted equities in Wednesday trading, but Republicans face a tough battle in garnering Democrat support.
  • New US jobless claims for the week that ended Saturday totaled 840,000, which came in above the median economist estimate of 820,000 claims. Still, the reading marked a slight decline from the prior week.
  • Oil prices climbe amid concerns that Hurricane Delta will slow output in the Gulf region. West Texas Intermediate crude gained as much as 2.9%, to $41.12 per barrel.
  • Watch major indexes update live here.

US equities rose on Thursday as investors cheered new signs that a stimulus deal could arrive ahead of the November 3 presidential election.

President Donald Trump signaled late Tuesday night that he supports a piecemeal approach to new fiscal relief, specifically naming the Paycheck Protection Program, airline aid, and another round of direct payments as policies he would sign off on.

The president’s tweets revived hope for fresh government support and helped the Dow Jones industrial average notch its best single-day gain since mid-July on Wednesday.

Here’s where US indexes stood soon after the 9:30 a.m. ET market open on Thursday:

Read more: Self-taught market wizard Richard Dennis took a $1600 loan and turned it into an estimated $200 million. He shares the 13 trading rules that turned his performance parabolic.

Though the renewed optimism kept the winning streak alive into Thursday, Republicans face an uphill battle in garnering support for such a strategy. Democrats have previously balked at standalone bills, and House Speaker Nancy Pelosi is poised to stand by her party’s $2.2 trillion proposal. With the GOP largely against a single relief package, both parties are far from a compromise.

Investors might be placing too much blind faith in Washington to get a deal done “given the Democrats reluctance previously to engage in a watered down approach,” Craig Erlam, senior market analyst at Oanda Europe, said. Yet warnings from Federal Reserve officials and other economists suggest they may feel enough pressure to act, he added.

The latest US jobless claims data showed 840,000 new unemployment filings for the week that ended Saturday. While that was a decline from the prior week’s revised figure, the reading did come in above the consensus economist forecast of 820,000 claims.

Read more: David Herro has steered the $22.2 billion Oakmark International fund through 5 crises since its inception 28 years ago. The veteran investor shares 3 stocks he’s betting on, and the pandemic-related opportunities he’s seizing.

Continuing claims, which track Americans currently receiving unemployment benefits, fell to 11 million for the week that ended September 26. That came in better than economist forecasts, which saw the metric falling to 11.4 million.

“The trend in cases appears to have flattened again, but we just don’t know which way the numbers will move next,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note. “If cooler weather pushes infections up again as people move indoors, the very modest decline in jobless claims could easily become a renewed spike.”

Airline stocks rebounded on hopes that a $25 billion aid measure could keep the companies from laying off tens of thousands of workers.

Regeneron soared after Trump praised the company’s experimental coronavirus drug as “key” to his speedy recovery. The president also highlighted plans to fast-track the drug’s approval for public use in a Wednesday afternoon tweet.

Read more: Goldman Sachs says to buy these 21 stocks poised to deliver the strongest sales growth through year-end

IBM shot higher after announcing plans to spin off its managed infrastructure business as a separate public company. The move is expected to be completed next year as a tax-free deal for IBM shareholders.

Spot gold traded as much as 0.7% higher, to $1,900.01 per ounce, barely retaking a key support level at intraday highs before paring some gains.

West Texas Intermediate crude jumped above its own support of $40 per barrel as traders prepared for Hurricane Delta to curb production in the Gulf region. The precious resource gained as much as 2.9%, to $41.12 per barrel. Brent crude, oil’s international standard, rose 2.9%, to $43.20 per barrel, at intraday highs.

Now read more markets coverage from Markets Insider and Business Insider:

A $2.5 billion investment chief highlights the stock-market sectors poised to benefit the most if stimulus is passed after the election – and says Trump ending negotiations doesn’t threaten the economic recovery

Fed officials fear lack of stimulus will stifle the US economic recovery, according to September meeting minutes

IMF hints at improved global GDP forecast but warns of ‘difficult climb’ ahead