US stocks are inching further into record heights on Thursday in New York, as Wall Street continues to coast following its rocket ride on hopes for coming COVID-19 vaccines.
The S&P 500 was up 0.1 per cent in early afternoon trading, a day after inching up to set another all-time high. The Dow Jones Industrial Average was 0.5 per cent higher while the Nasdaq has added 0.4 per cent. It sets up the Australian sharemarket for a bright finish to the week, with futures at 5.10am AEDT pointing to a gain of 12 points, or 0.2 per cent, at the open.
A couple of reports that were better than expected on the economy helped support stocks. One showed that growth in the US services sector, including health care and retail, was slightly stronger last month than economists expected. A separate report said fewer US workers filed for unemployment benefits last week than forecast, though economists cautioned the number may have been distorted by the Thanksgiving holiday.
Momentum across markets has slowed after the S&P 500 surged 10.8 per cent last month on hopes that one or more coronavirus vaccines will get the global economy closer to normal next year. The burst of optimism boosted stocks of travel companies, banks and smaller businesses in particular, after they were among the most harshly punished during the pandemic.
“It’s pretty clear that investors are looking at some of those areas that would benefit from a more complete reopening,” said David Lefkowitz, head of Americas equities at UBS Global Wealth Management.
Now that stock indexes are back at all-time highs, worries about the still-raging pandemic are making further big gains more difficult. Governments around the world are considering the approval of several coronavirus vaccines, and a US rollout could begin this month if regulators give their approval. Britain has already approved emergency use of a COVID-19 vaccine developed by Pfizer and BioNTech.
But vaccines would initially go out only to protect health care workers and others at high risk. In the meantime, coronavirus counts and hospitalizations continue to surge. That has governments around the world bringing back varying degrees of restrictions on businesses and consumers worried about their own health. That, in turns, is threatening the economic recovery that got underway in the spring.
Across the country, the Labor Department said 712,000 workers applied for jobless benefits last week. That’s an improvement from the 787,000 of the prior week, but it still towers over the roughly 225,000 workers that were applying weekly before the pandemic struck.
One hope that has flickered on and off in markets is that Democrats and Republicans in Washington may get past their bitter partisanship to reach a deal to provide more financial support for the economy. Democrats are making another push for a compromise and have cut their demands for the size of a potential rescue. President-elect Joe Biden urged Congress on Wednesday to pass a relief bill now, with more aid to come next year.
But Democrats and Republicans have been arguing for months without much progress.
“Ideally we would get some kind of fiscal support sooner rather than later,” Lefkowitz said. “The big news is there’s more of a line of sight on the fact that the economy will likely get back to full strength.”
On Wednesday, Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin underscored the importance of such relief during a House Financial Services Committee hearing. The economy has been struggling more since extra unemployment benefits and other stimulus approved earlier this year by Congress expired.
Growth in the country’s services industries slowed last month, according to a report from the Institute for Supply Management, though it was the sixth straight month of improvement.
Apparel company PVH rose 7.8 per cent for one of the biggest gains in the S&P 500 after the company behind the Calvin Klein and Tommy Hilfiger brands reported much stronger profit for the latest quarter than analysts expected.
Several travel-related companies were also at the top of the leaderboard, clawing back more of their precipitous losses from earlier in the pandemic. American Airlines Group rose 10.8 per cent, Norwegian Cruise line gained 10 per cent, and United Airlines climbed 7.8 per cent. All three, though, remain more than 40 per cent lower for 2020.
On the losing end was Kroger, which fell despite 4.7 per cent despite reporting a stronger profit for its latest quarter than analysts expected. The grocer’s revenue fell short of forecasts. Expectations may also have built too high after its stock performed better than the rest of the S&P 500 through much of the pandemic.
The yield on the 10-year Treasury dipped to 0.92 per cent from 0.94 per cent late Wednesday.
In energy markets, oil prices were modestly higher as talks continue among OPEC countries on production levels. The talks are due to include Russia Thursday.
US benchmark crude oil was up 0.3 per cent at $US45.40 per barrel. Brent crude, the international standard, was 0.5 per cent higher at $US48.49 per barrel.
In European stock markets, the German DAX lost 0.5 per cent, and the French CAC 40 fell 0.2 per cent. The FTSE 100 in London rose 0.4 per cent.
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Source: Thanks smh.com