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 0.6% to 3349.2 as of the 4 p.m close of
trading in New York. The Dow Jones Industrial Average added 0.7%,
while the tech-heavy Nasdaq increased 1.0%.
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 goalposts
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. White House chief of staff Mark Meadows said
Thursday Mr. Trump would take executive actions on jobless aid if
talks didn't advance.
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.
"The fact that the jobs market hasn't picked up so fast... 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."
The S&P's communication services sector led the index's
gains, with Walt Disney gaining 2.2%. Daniel Loeb's Third Point LLC
hedge fund on Thursday told clients it had taken a stake in Walt
Disney Co. in the second quarter. The letter said Disney's sell-off
this year amid the pandemic overlooked that the virus could
accelerate Disney's streaming plans--its "biggest market
opportunity ever."
Gains by Facebook, Google parent Alphabet and Netflix also
contributed to the sector's gains. Big tech companies have led
gains for the index for much of the year.
The index's healthcare sector, meanwhile, saw the biggest loss
through mid-day, selling off 1%. President Trump was expected to
sign an executive order Thursday to help increase production of
essential medicines, medical equipment and protective gear in the
U.S.
Lisa Wheatley, portfolio manager of NicHealth, the healthcare
strategy of Nicholas Investment Partners in the San Diego area,
said the order could antagonize China as well as increase costs to
U.S. consumers of generic drugs. "This is early stage, but there's
a little skittishness over whether this is the start of the
traditional rhetoric over healthcare you expect in an election
year," Ms. Wheatley said.
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 16:18 ET (20:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.