Stocks pared gains to end slightly lower Thursday, after the Dow and Nasdaq Composite reached fresh record intraday highs earlier in the session.
The three major indexes were little changed even after the Labor Department’s weekly jobless claims report showed Thursday morning that initial claims spiked to the highest level since August last week. However, some strategists have suggested that the recent deterioration in labor market data could further bolster the case for more fiscal stimulus.
“The economy clearly needs additional support from Washington because right now rising jobless claims tells us the labor market recovery has stalled and the direction is full-tilt down,” Chris Rupkey, chief financial economist for MUFG Union Bank, said in an email Thursday morning.
In Washington, a majority of members in the House of Representatives voted late Wednesday to impeach President Donald Trump for a second time, making him the first U.S. president in history to be impeached twice. Senate Majority Leader Mitch McConnell, however, said he would not call back members of the Senate early before Jan. 19 to hold the impeachment trial, suggesting Trump would serve out the rest of his term. The trial could still take place once Trump leaves office.
Stocks looked through the debates in the House ahead of the impeachment vote. And equities are likely to continue shrugging off the ongoing tension in Washington, according to many strategists.
“The market cares about fundamentals, it cares about profits, it cares about consumer demand,” Eddie Ghabour, managing partner at Key Advisors Group, told Yahoo Finance on Wednesday. “So these are headline risks ... But look, we had people worried about the election, that proved to be nothing that hurt the market there. People were worried about the runoff election in Georgia. These are just, again, headline risks. They have nothing to do with the fundamentals of the equities, and that’s why the market is going to continue to ignore these things, in my opinion.”
Instead, the prospects of more stimulus — both from Congress and from the Federal Reserve — have helped buoy equities even after stocks’ strong run-up last year and at the beginning of 2021. Stocks have been in a holding pattern over the past couple of sessions as investors await the start of the Biden administration, which in tandem with a Democratic House and Senate, is likely to produce substantial additional fiscal stimulus to support individuals and businesses and boost consumer spending. Biden is expected to unveil details of a substantial additional virus-relief package Thursday.
“We’re still in an economy that is struggling because of the pandemic, and until we put the virus behind us and we can truly open up the economy and get it back to what we were doing, or close to what we were doing, prior to coronavirus, I think stimulus is needed and it’s important,” Jason Ware, Albion Financial Group chief investment officer, told Yahoo Finance.
“As we look at the new administration in Washington and a Congress that’s tilted toward the Democrats, we do expect more stimulus to come down the line,” Ware added. “It’s probably not going to happen over the next couple of weeks, but certainly by the spring an extension of unemployment benefits for those who are still out of work, maybe a boost to what they’re getting on a weekly basis, and fresh stimulus checks closer to $2,000 might be something that has an appetite in Washington.”
4:04 p.m. ET: Stocks erase earlier gains, Dow ends slightly lower after touching record intraday high
Here were the main moves in markets as of 4:04 p.m. ET:
S&P 500 (^GSPC): -14.30 (-0.38%) to 3,795.54
Dow (^DJI): -68.95 (-0.22%) to 30,991.52
Nasdaq (^IXIC): -16.31 (-0.12%) to 13,112.64
Crude (CL=F): +$0.68 (+1.29%) to $53.59 a barrel
Gold (GC=F): -$7.90 (-0.43%) to $1,847.00 per ounce
10-year Treasury (^TNX): +4.1 bps to yield 1.1290%
1:23 p.m. ET: ‘Now is not the time to be talking about exit,’ Powell says of Fed’s asset purchases
Federal Reserve Chair Jerome Powell suggested Thursday that it was too soon for the central bank to begin thinking about tapering asset purchases, currently set at a rate of $120 billion per month, in the face of the ongoing coronavirus pandemic.
“Now is not the time to be talking about exit. I think that is another lesson of the Global Financial Crisis, is be careful not to exit too early and by the way, try not to talk about exit all the time if you’re sending that signal, because the markets are listening,” Powell said in virtual remarks with the Princeton University Bendheim Center for Finance Thursday afternoon. “The economy is far from our goals and as I mentioned a couple times, we’re strongly committed to our framework and using our monetary policy tools until the job is well and truly done.”
“When it does become appropriate for the committee to discuss specific dates — and that will be when we have clear evidence that we’re making progress toward our goals and that we’re on track to make substantial further progress toward our goals — when that happens and we can see that clearly, we will let the world know,” he added. We will communicatively very clearly to the public and we’ll do so by the way well in advance of active consideration of beginning a gradual taper of asset purchases.”
Powell’s remarks come following similar statements from other Federal Reserve officials, who also recently struck a cautious tone on signaling the path forward for asset purchases. Federal Reserve Bank of St. Louis President James Bullard and Boston Federal Reserve President Eric Rosengren each suggested earlier this week that discussions of bond tapering at the Fed should not be taking place in the near-term. The Fed’s aggressive crisis-era asset purchase program has been a key component of the central bank’s response to the COVID-19 pandemic, helping infuse massive amounts of liquidity into the financial system.
12:43 p.m. ET: Powell says Fed’s new framework around inflation is ‘not tied to a particular mathematical formula’
Federal Reserve Chair Jerome Powell elaborated on the Federal Reserve’s new monetary policy framework around inflation in virtual remarks with the Princeton University Bendheim Center for Finance Thursday afternoon.
According to Powell, the Fed’s updated thinking around inflation – allowing for inflation to run “moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%” – is meant to offer a flexible approach to balancing both the price stability and employment-maximizing goals of the central bank’s dual mandate.
“We’ve called it a flexible average inflation targeting regime…we haven’t tied ourselves, and we won’t, to a particular mathematical formula when we need to achieve inflation moderately above 2% for some time,” Powell said Thursday. “So policy will continue to reflect a broad array of considerations. There’s always an element of risk management, there’s always an element of judgement.”
“We want inflation expectations so it’ll be well-anchored at 2%. And again, you need to average 2% inflation over time to achieve that,” he added.
“The second reason that we stay flexible is just that we’re a dual-mandate bank and we’ll always consider both parts of the mandate,” he said. “And that means we couldn’t really tie policy to a formula that applies to only one side, in this case inflation.”
Amid the pandemic and even prior to the outbreak, inflation has stayed well below the Fed’s 2% target, as measured by core personal consumption expenditures. Plus, a large amount of slack remains in the labor market, which will serve to keep weighing on inflation, Powell added.
12:30 p.m. ET: Petco shares jump 44% in public debut on the Nasdaq
This came after the company sold 48 million shares in its IPO for $18 each, raising $864 million.
Petco’s net sales increased 9% in the first 39 weeks of fiscal 2020 over the prior year, and its adjusted EBITDA grew nearly 15% to $293 million
11:47 a.m. ET: Poshmark shares more than double in public debut
Shares of Poshmark (POSH) jumped 132% over their IPO price to open at $97.50 per apiece on Thursday, making the e-commerce site the latest company to see a major first-day pop in its public debut.
The company priced its IPO Wednesday at $42 per share, above its previously anticipated range of $35 to $39 a share. The company sold 6.6 million shares to raise $277 million, at a fully diluted valuation of about $3.5 billion.
9:30 a.m. ET: Stocks open higher as stimulus hopes increase after disappointing jobless claims
Here were the main moves in markets, as of 9:30 a.m. ET:
S&P 500 (^GSPC): +9.34 points (+0.25%) to 3,819.18
Dow (^DJI): +107.54 (+0.35%) to 31,168.01
Nasdaq (^IXIC): +37.73 (+0.29%) to 13,167.06
Crude (CL=F): -$0.33 (-0.62%) to $52.58 a barrel
Gold (GC=F): -$11.00 (-0.59%) to $1,843.90 per ounce
10-year Treasury (^TNX): +0.4 bps to yield 1.092%
8:52 a.m. ET: US import, export prices accelerated in December
Prices for U.S. imports and exports both accelerated more than anticipated in December over November, the Commerce Department said Thursday, as fuel prices firmed at the end of a difficult year.
Import prices increased 0.9% in December month-on-month following a 0.2% increase in November. Consensus economists expected a 0.7% rise, according to Bloomberg data. This marked the fastest increase in import prices since August, as fuel prices jumped 7.8%.
Export prices rose 1.1% in December, for a print nearly double the 0.6% consensus estimate. This followed a 0.7% rise in export prices in November, and represented the fastest rise in export prices since June. A 1.3% jump in non-agricultural export prices contributed to much of the gain.
8:40 a.m. ET: New jobless claims spiked last week as labor market deteriorated further amid ongoing pandemic
New weekly unemployment claims spiked far more than expected last week to reach a five-month high, as the coronavirus pandemic and stay-in-place orders weighed heavily on the labor market.
Initial jobless claims totaled 965,000 for the week ended Jan. 9, marking the highest level since August. Consensus economists were looking for a print of 789,000, after the prior week’s revised 784,000 new claims.
Continuing jobless claims, which measure the total number of individuals still receiving regular state unemployment benefits, also unexpectedly rose last week to a one-month high of 5.271 million.
7:40 a.m. ET: Delta posts another steep loss as COVID hits travel demand, but cash burn beats expectations
Delta’s adjusted fourth-quarter loss per share was $2.53, or wider than the $2.49 expected, and represented a fourth straight quarterly loss. For the full year, Delta’s losses came in at a massive $15.6 billion before taxes.
However, Delta’s fourth-quarter cash outflow came in smaller than anticipated, suggesting airlines’ aggressive cost-cutting measures and a slow return of travel compared to the spring were beginning to help. December quarter cash burn averaged $12 million per day, or better than the $14 million the company projected and marking a 90% reduction in cash burn since late March.
“Our December quarter results capped the toughest year in Delta’s history,” CEO Ed Bastian said in a statement. “While our challenges continue in 2021, I am optimistic this will be a year of recovery and a turning point that results in an even stronger Delta returning to revenue growth, profitability and free cash generation.”
7:25 a.m. ET Thursday: Stock futures mixed, Nasdaq futures come under pressure
Here were the main moves in markets, as of 7:25 a.m. ET Thursday:
S&P 500 futures (ES=F): 3,808.5, up 4.75 points or 0.12%
Dow futures (YM=F): 31,037.00, up 78 points or 0.25%
Nasdaq futures (NQ=F): 12,964.00, down 8.25 points or 0.06%
Crude (CL=F): -$0.21 (-0.4%) to $52.70 a barrel
Gold (GC=F): -$11.50 (-0.62%) to $1,843.40 per ounce
10-year Treasury (^TNX): +1.7 bps to yield 1.105%
6:03 p.m. ET Wednesday: Stock futures open higher
Here were the main moves in markets, as of 6:03 p.m. ET Wednesday:
S&P 500 futures (ES=F): 3,807.25, up 3.5 points or 0.09%
Dow futures (YM=F): 30,992.00, up 33 points or 0.11%
Nasdaq futures (NQ=F): 12,973.5, up 1.25 points or 0.01%