Stocks rose Thursday, with stimulus talks in Washington still at the center of investors’ attention. Each of the three major indices increased to touch fresh record highs by market close.
Traders have hoped that congressional lawmakers will succeed in coming to a deal to provide a virus-relief package to small businesses and Americans across the country by the end of the week, ending a months-long stalemate over more aid.
Negotiators including Senate Majority Leader Mitch McConnell, House Speaker Nancy Pelosi, Senate Minority leader Chuck Schumer and House Republican leader Kevin McCarthy convened again on Wednesday to discuss the package, which is expected to total around $900 billion and include direct checks to Americans and enhanced federal unemployment benefits. It will likely be attached to the broad government funding bill for the fiscal year, which must be advanced by a Friday deadline to avoid a partial government shutdown.
The Federal Reserve on Wednesday doubled down on its own commitment to use its monetary policy tools to support the virus-stricken economy. Central bank officials said they would continue the Fed’s asset purchase program at the current rate “until substantial further progress has been made toward the committee’s maximum employment and price stability goals,” leaving open the possibility that the central bank’s quantitative easing will continue throughout and potentially beyond the post-pandemic economic recovery.
“The Fed did not take their foot off the gas quite yet as they decided to maintain the current pace of the asset purchase program,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email Wednesday. “The Fed has made it clear that downside risks to the economy still persist in the coming months despite what financial markets may be signaling with risk assets performing well and stocks near record highs.”
Equity investors, however, have largely kept looking through near-term risks to the economy and ahead to the expected 2021 recovery as a vaccine enables broader business re-openings.
“The market is clearly anticipating that the rollout of the vaccine will go smoothly and the market is clearly anticipating that earnings surprises from corporations will continue to be maintained,” Kirk Hartman, Wells Fargo Asset Management global chief investment officer, told Yahoo Finance on Wednesday. “And I hope all those things continue, but you do have to have a little bit of concern about risk given where these markets are.”
“Given all the stimulus, the bond purchases, the maintenance of rates at zero, I think you are going to get a boost in the markets at the beginning of the year,” he added. “And my recommendation would be once you get that boost then I would look to pare it back. But it's hard to argue with these fundamentals here, there's so much money in the system and clearly, the Fed indicated today that it was going to continue.”
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4:04 p.m. ET: S&P 500, Dow and Nasdaq each rise to record closing highs as traders hold out hope for another stimulus deal
Here were the main moves in markets as of 4:04 p.m. ET:
The lawsuit alleges that Google uses anticompetitive tactics and contracts to maintain an illegal monopoly in search and search advertising. This comes after the Justice Department filed an antitrust lawsuit against Google in October, which also centered on the alleged illegal monopolistic characteristics of Google’s search business. On Wednesday, Texas’s state attorney general led another multi-state coalition in filing a lawsuit over the company’s advertising business.
Shares of Alphabet fell 0.9% intraday, pacing toward back-to-back sessions of declines.
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1:11 p.m. ET: Piper Sandler sets 4,225 price objective for S&P 500 in 2021
The S&P 500 is set to rally another 14% from its recent record closing high from December 8, according to Piper Sandler strategist Craig Johnson. His call marks one of the latest among Wall Street strategists for the S&P 500 next year, with the vast majority expecting the index to breach 4,000 in 2021.
However, the path forward is unlikely to be a linear as it had been this year, when the S&P 500 took off on a meteoric rally following its March lows, Johnson said.
“Given the magnitude of the recent rally, and assumptions over a swift vaccination period and forthcoming stimulus deal, we believe risk for near-term disappointment remains high,” Johnson wrote in a note. “The reality of the outbreak causing potential prolonged lockdowns over the coming months could portend a bumpy economic road ahead.”
“We further suspect this backdrop will create above-average volatility next year with downside protection coming in the form of fiscal and monetary policy support,” he added.
But with a vaccine on the way, Johnson said he ultimately believes that “hope will prevail,” sending the S&P 500 to 4,225 by year-end 2021.
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10:20 a.m. ET: Square, PayPal stocks surge as Bitcoin prices add to record rally
Shares of fin-tech companies Square (SQ) and PayPal (PYPL) each jumped in intraday trading on Thursday as Bitcoin prices extended their record-setting rally. Both companies offer services giving users access to cryptocurrencies.
Bitcoin (BTC-USD) surpassed $23,500 on Thursday after breaching the $20,000 level for the first time ever only a day earlier.
Square, which added a Bitcoin-purchasing feature to its Cash App platform in 2019, saw its shares rise about 3.8% in intraday trading, adding to its year-to-date gain of more than 270%. The company posted its first-ever quarter in which Bitcoin-related revenue topped $1 billion during the three months ending on September 30.
PayPal shares, meanwhile, jumped 2.5% intraday. The peer-to-peer money-transfer company launched a service allowing users to buy, sell and hold digital coins this fall, becoming one of the latest major players to expand access to cryptocurrencies. Shares of PayPal have more than doubled for the year-to-date.
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9:31 a.m. ET: Stocks open higher
Here were the main moves in markets, as of 9:31 a.m. ET:
S&P 500 (^GSPC): +19.51 points (+0.53%) to 3,720.68
U.S. housing starts jumped 1.2% in November over October to a seasonally adjusted annualized rate of 1.547 million, the Commerce Department reported Thursday. This topped estimates for a 0.3% month-over-month gain, according to Bloomberg consensus data. October’s advance was upwardly revised to 6.3%, and November’s rise marked a third straight monthly increase in new-home building.
Building permits, which approximate future home-building, jumped 6.2% to a seasonally adjusted annualized rate of 1.639 million, blowing past estimates for a rise of just 1.0%.
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8:38 a.m. ET: Jobless claims unexpectedly rose again last week, coming in at 885,000
New jobless clams unexpectedly jumped for a second straight week last week to 885,000, the Labor Department said in a report Thursday morning. This grew from the upwardly revised 862,000 new claims filed during the week ended Dec. 5, and came in above consensus economist expectations for 818,000, according to Bloomberg data.
Continuing jobless claims fell more than expected to 5.508 million, though this was mostly due to more workers rolling onto longer-term federal unemployment programs. The number of Americans joining the Pandemic Emergency Unemployment Compensation and Pandemic Unemployment Assistance programs jumped by nearly 1 million to a total of more than 14 million at the end of November.
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7:15 a.m. ET Thursday: Stock futures point to a higher open, Dow futures add 100+ points
Here were the main moves in markets, as of 7:15 a.m. ET Thursday:
S&P 500 futures (ES=F): 3,719.75, up 19 points or 0.51%
Dow futures (YM=F): 30,287.00, up 126 points or 0.42%
Nasdaq futures (NQ=F): 12,723.5, up 58.25 points or 0.46%
6:00 p.m. ET Wednesday: Stock futures begin the overnight session little changed
Here were the main moves in markets, as of 6:00 p.m. ET Wednesday:
S&P 500 futures (ES=F): 3,702.5, up 1.75 points or 0.05%
Dow futures (YM=F): 30,182.00, up 21 points or 0.07%
Nasdaq futures (NQ=F): 12,673.75, up 8.5 points or 0.07%
NEW YORK, NEW YORK - DECEMBER 02: A large Christmas Tree is displayed near the Fearless Girl Statue in front of the New York Stock Exchange on December 02, 2020 in New York City. (Photo by Alexi Rosenfeld/Getty Images)