US Stocks Shake Off Slump to Reach More Record Highs
Wall Street notched more milestones Friday as the market largely shrugged off another discouraging jobs report amid expectations that the incoming Biden administration will pump more aid into the pandemic-ravaged economy.
The S&P 500 rose 0.5%, its second straight record high. The Dow Jones industrial average and Nasdaq Composite Index also closed at record highs.
Technology stocks and companies that rely on consumer spending helped lift the market, outweighing losses in financial, industrial and other sectors. The gains pushed the S&P 500 to its second consecutive weekly gain. Treasury yields continued to move higher, fueled by expectations of increased federal borrowing, more stimulus for the economy and the possibility of higher inflation.
The Labor Department said Friday that employers had cut jobs for the first time since April as the worsening pandemic led more businesses to shut down. But Wall Street remains hopeful that Washington will come through with more badly needed support for American workers and businesses following President-elect Joe Biden’s inauguration.
“There are still close to 4 million people who have been long-term unemployed, which could threaten growth in the next couple of months,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “The market continues to slowly grind higher because [investors] are expecting additional stimulus when the new administration goes into effect later this month.”
The S&P 500 rose 20.89 points to 3,824.68. The Dow gained 56.84 points, or 0.2%, to 31,097.97. The Nasdaq climbed 134.50 points, or 1%, to 13,201.98.
With Democrats soon in control of the presidency, Senate and House, investors are anticipating Washington will try to deliver more stimulus for the struggling economy. That’s layering on top of expectations already built up for the economy to get healthier as coronavirus vaccines roll out in 2021.
Vaccine distribution is ramping up, but an economic rebound will still likely take many months while people continue to struggle with unemployment, said Jack Manley, global market strategist at J.P. Morgan Asset Management.
“That’s why we’re excited about what we might see from a fiscal perspective,” he said. “You’re going to need something to shore up those people.”
Another encouraging thing for many investors is that Democrats will have only a thin majority in the Senate. In the optimistic case for Wall Street, that could give them enough clout to push through more stimulus for the economy but not enough to raise tax rates sharply and toughen up regulations so much that they significantly damage profits for companies.
Japan’s Nikkei 225 rose 2.4%, its highest finish in more than 30 years. Stocks also rose in South Korea and Hong Kong. European markets ended higher.
Source: Voice Of America