(Reuters) – Wall Street’s main indexes hovered near record highs on Thursday as investors counted on more pandemic relief and speedy vaccine rollouts under the Biden administration to support the economy after data showed a weakening labor market recovery.
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 shed jobs for a second straight month in January.
“It’s still the realization that the disappointment in the employment is not going away anytime soon and that we’re not out of the woods from the economic point of view,” said Ryan Detrick, chief market strategist at LPL Financial in Charlotte, North Carolina.
At 11:53 a.m. ET, the Dow Jones Industrial Average fell 15.14 points, or 0.05%, to 31,173.24 and the S&P 500 gained 1.89 points, or 0.05%, to 3,853.74.
The Nasdaq Composite gained 64.99 points, or 0.48%, to 13,522.24, boosted by a jump in shares of technology heavyweights 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.
In a reversal of the trend earlier this month, the Russell 1000 growth index, which includes mega-cap technology stocks, is far outperforming the Russell 1000 value index this week.
“Investors are going to realize that technology names are still where a lot of impressive earnings growth is coming from and those shares could hold up well because they’ve underperformed for the last couple of months,” Detrick added.
President Joe Biden is expected to launch an array of initiatives during his initial days in office, including ramping up testing and vaccine rollouts.
Democrats took control of the U.S. Senate on Wednesday and Republicans in the Congress signaled a willingness to work on Biden’s $1.9 trillion stimulus plan that would enhance jobless benefits and provide direct checks to households.
Communication services, consumer discretionary and technology were the only S&P sectors in green.
Energy, financial and industrial stocks, which have helped the S&P 500 rally 14% since the Nov. 3 presidential election, fell between 0.7% and 2.6%.
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.
Earnings at S&P 500 companies are expected to rise by 24% in 2021 after falling 15% in 2020, as per Refinitiv data as of Jan. 15.
United Airlines Holdings Inc dropped 7% after posting a fourth straight quarterly loss due to the COVID-19 pandemic but said it aims to cut about $2 billion of annual costs through 2023.
Ford Motor Co jumped 9% extending gains for a second straight day after Deutsche Bank raised its price target on the U.S. automaker’s stock.
Declining issues outnumbered advancers by a 1.6-to-1 ratio on the NYSE and by a 1.6-to-1 ratio on the Nasdaq.
The S&P 500 posted 18 new 52-week highs and no new low, while the Nasdaq recorded 270 new highs and eight new lows.
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