New York: The S&P 500 and Nasdaq closed at record highs, propelled by optimism about more pandemic relief under the Biden administration to support the economy after data showed a tepid labor market recovery.
The Dow was also poised for a record until falling into negative territory in the final minutes of trading.
The number of Americans filing new applications for unemployment benefits dipped to 900,000 last week but still remained stubbornly high as the COVID-19 pandemic tears through the nation, raising the risk that the economy will shed jobs for a second straight month in January.
But other data showed the housing and manufacturing sectors as areas of strength to help buttress the economy.
“We’ve had a very strong momentum going into this year and coming into the Biden administration… because of prospects of a bigger stimulus check and more spending in general,” said Mohannad Aama, managing director at Beam Capital Management LLC in New York.
The Dow Jones Industrial Average fell 12.37 points, or 0.04%, to 31,176.01, the S&P 500 gained 1.22 points, or 0.03%, to 3,853.07 and the Nasdaq Composite added 73.67 points, or 0.55%, to 13,530.92.
The Nasdaq Composite advanced, boosted by a jump in shares of megacap stocks such as Alphabet Inc, Apple Inc and Amazon.com Inc ahead of their earnings reports in the coming weeks.
It follows Netflix Inc’s blowout results on Wednesday that revitalized the “stay-at-home” beneficiaries, adding $262 billion in overall market capitalization to the FAANG group of stocks.
“Given the possible surge in COVID cases, investors are going to go back to the old playbook that worked well at similar times last year… (The) technology sector is performing well and (so is) anything related to working from home,” Aama added.
In a reversal of the trend earlier this month, the Russell 1000 growth index, which includes technology stocks, is this week far outperforming the Russell 1000 value index, which is heavily comprised of cyclical stocks such as financials and energy.
President Joe Biden has launched several initiatives during his initial days in office, including ramping up testing and vaccine rollouts.
Technology, consumer discretionary and communication services which includes Alphabet and Facebook, were the only S&P sectors in green.
Energy slipped 3.44% as the biggest drag among 11 major S&P sectors, following news Biden revoked the Keystone XL oil pipeline project’s presidential permit.
With valuations near a 20-year high, corporate results could present an important test of whether the stock market rally has run ahead of fundamentals. – Agencies
