US stocks are teeter-tottering on Thursday on Wall Street, following more evidence that the pandemic is tightening its grip on the economy and as investors wait to see if Congress will do anything about it.
The S&P 500 was flipping between gains and losses and was 0.1 per cent lower in early afternoon trading, a day after pulling 0.8 per cent lower from its record high. The Dow Jones Industrial Average was down 0.2 per cent and the Nasdaq composite was 0.4 per cent higher. The Australian sharemarket is set to open lower on Friday, with futures at 4.58am AEDT pointing to a dip of 30 points, or 0.5 per cent.
Treasury yields wobbled but were holding relatively steady after a report showed 853,000 U.S. workers applied for unemployment benefits last week. That was more than economists expected and an acceleration from the prior week. It’s also the latest reminder that the pandemic is doing more damage to the economy in the near term, even if prospects are rising that a COVID-19 vaccine will get the economy healthy in the longer term.
Economists and investors have been imploring Congress to deliver more financial support in the meantime, to help carry the economy until it can stand on its own. After months of partisan bickering and no progress on Capitol Hill, momentum seemed to swing higher recently for a deal, but talks are still mired in deep uncertainty.
On Thursday, Treasury Secretary Steven Mnuchin reported headway in talks over President Donald Trump’s latest $US900 billion-plus ($1.2 trillion) plan. But, Democrats and Republicans are still at odds over the size and scope of any deal.
“There’s nothing really new there, except now you’ve got some softening economic data,” said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute
Thursday’s discouraging report on joblessness could add to the urgency Congress feels to act. In the face of uncertainty, though, trading was jumbled.
Energy stocks, which often move with expectations for the economy’s strength, were climbing to the biggest gain among the 11 sectors that make up the S&P 500, at 3.1 per cent. They rose with crude oil prices.
Starbucks gained 4.2 per cent for one of the bigger gains in the index after the coffee chain backed its profit forecast for this fiscal year and said it expects “outsized growth” in the following one.
But industrial companies, whose stocks have been been tracking hopes for the economy, were falling. So were the majority of stocks in the S&P 500.
The choppiness in the market is not unheard of, considering the stellar gains for stocks in November and uncertainty still lingering over the timing of vaccine distribution as virus cases rise, Christopher said.
“It’s not unusual to see some consolidation after a strong month like that,” he said.
Elsewhere in the market, shares of Airbnb are set to begin trading later in the day. Interest has been high for the home sharing company, which has seen its business recover faster through the pandemic than hotels have.
A day earlier, another San Francisco-based company, DoorDash, soared nearly 86 per cent in the first day of trading for its stock.
In Europe, stock markets were subdued even though the European Central Bank delivered another €500 billion ($805 billion) in stimulus for the economy. Coronavirus counts are also spiralling higher on the continent, and its central bank is promising to buy more bonds to push the economy along. Germany’s DAX lost 0.3 per cent, and France’s CAC 40 edged up by 0.1 per cent. The FTSE 100 in London rose 0.5 per cent.
In Asia, markets made modest moves. Japan’s Nikkei 225 slipped 0.2 per cent, South Korea’s Kospi fell 0.3 per cent and Hong Kong’s Hang Seng dipped 0.3 per cent. Stocks in Shanghai were virtually unchanged.
The yield on the 10-year Treasury held steady at 0.93 per cent. A government report released Thursday morning showed that inflation was slightly stronger last month than economists expected, though it remains modest.
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Source: Thanks smh.com