U.S. Stocks Higher as Jobless Claims Edge Lower
August 06 2020 - 11:10AM
Dow Jones News
By Caitlin Ostroff and Juliet Chung
U.S. stocks rose Thursday as the number of Americans applying
for unemployment benefits came in below expectations, but still
held at historically high levels.
The S&P 500 rose 0.1% to 3331.43, within 2% of its record
close in February. The Dow Jones Industrial Average added 0.3%,
while the tech-heavy Nasdaq increased 0.1%.
Driving the trading, about 1.2 million filed new claims for
unemployment benefits for the week ended Aug. 1, fewer than the 1.4
million analysts expected.
Ram Lee, president of New York-based Seven Bridges Advisors,
said the dip in weekly jobless claims -- the lowest number since
March -- clearly illustrated how the pandemic has moved the goal
posts for what constitutes positive developments.
"We've not seen, prior to this year, weekly jobless numbers over
about 700,000" since the 1980s, Mr. Lee said. "We've gotten used to
numbers that are so large any improvement is seen as good news. But
you still have a pretty meaningful contraction of GDP and a huge
amount of joblessness."
The S&P 500 has risen over the last four trading sessions as
investors bet that lawmakers will hammer out the terms of a new
coronavirus-relief package. The White House on Wednesday moved to
increase pressure on Democrats to get the deal done, saying they
were prepared to walk away from negotiations and use executive
actions by President Trump if an agreement isn't within reach by
the end of the week.
Despite lingering differences on the elements of a new relief
package, investors expect the government will come through with
spending plans as economic data shows signs of a stalling
recovery.
"Is Congress going to come to an agreement as soon as possible?
I don't think the market is pricing in any kind of a
disappointment," said Seema Shah, chief strategist for Principal
Global Investors. "Once you take away any of the fiscal help, it
puts the recovery really at risk."
"The fact that the jobs market hasn't picked up so fast also
means there is a greater chance of this fiscal stimulus getting
passed," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"Even if the economy goes well, investors will still be asking for
the Federal Reserve and the government to have their hands on the
market."
Among the day's big movers, shares in Bristol Myers Squibb rose
3.4% after second-quarter profits beat consensus estimates and
shares in Bausch Health Cos. soared 15% after it said it is
planning to spin off its eye-care business, confirming a Wall
Street Journal report.
Shares in GoDaddy gained 12% after the web hosting and
domain-name registration company reported fiscal second-quarter
revenue that exceeded Wall Street estimates.
Overnight, the mood in markets dimmed after U.S. Secretary of
State Mike Pompeo asked American companies to consider withholding
their apps from phones made by China's Huawei Technologies,
according to analysts. Mr. Pompeo also urged the companies to halt
using Chinese cloud providers such as Tencent, Alibaba and Baidu
for storing sensitive data.
Those comments are stoking concern that the U.S. pushback on
Chinese apps could go beyond TikTok, analysts said. The popular
video-sharing service has been in the eye of a storm as Microsoft
moves to buy its U.S. operations from its Chinese owner after
President Trump raised security concerns about the app.
In Asia, major markets ended the day on a mixed note. The
Shanghai Composite gained 0.3% by the close of trading, while Hong
Kong's Hang Seng fell 0.7% and Japan's Nikkei 225 index dropped
0.4%.
Gold gained 1% to $2,069.10 a troy ounce, putting its advance
this year at 35% as the precious metal, considered a haven asset,
continued to draw risk-averse investors.
In bond markets, the yield on the 10-year Treasury edged lower
to 0.527%, from 0.541% Wednesday. Yields fall when prices rise.
The British pound ticked up 0.3% against the U.S. dollar after
the Bank of England held its benchmark interest rate steady and
said negative interest rates may not be the right tool to spur
faster activity. Policy makers projected that the U.K. economy will
take until the end of next year to make up the ground lost during
the coronavirus pandemic.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Juliet
Chung at juliet.chung@wsj.com
(END) Dow Jones Newswires
August 06, 2020 10:55 ET (14:55 GMT)
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