By Jem Bartholomew 

U.S. stocks opened slightly higher Thursday, with investors paying close attention to negotiations in Washington over a fresh stimulus bill.

The S&P 500 index edged up 0.2%, while the Dow Jones Industrial Average added 40 points in early New York trading and the Nasdaq Composite Index gained 0.5%.

Overseas, the pan-continental Stoxx Europe 600 was also down 0.3%, while the U.K.'s FTSE 250 climbed 0.7% after the government set additional support for companies affected by new coronavirus restrictions.

The number of Americans applying for unemployment benefits fell to 787,000 last week, according to data from the Labor Department, a sign of a pickup in the market. Initial jobless claims had stabilized between 800,000 and 900,000 since late August, suggesting the summer's labor market improvement had cooled.

Markets have been laser-focused on the prospect of a new wave of U.S. fiscal stimulus, even as the prospects of a deal being struck by House Democrats and Senate Republicans before the Nov. 3 election remain unclear.

"It's dominating the headlines and markets are certainly still paying attention," said Andrew Hunter, senior U.S. economist at Capital Economics.

Talks between House speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are expected to resume Thursday but there was increasing talk of a vote after the election.

Tristan Hanson, multiasset fund manager at M&G Investments, said investors obsessing over a new stimulus package before the election are "frankly quite myopic, really. It would seem likely whoever wins that there'll be some form of fiscal stimulus in the next few months, that seems to be the mood music."

In individual stocks, Tesla jumped 4.4% in off-hours trading after the electric-car maker reported its fifth consecutive quarter of profit after years of losses.

Shares of AT&T rose 3.2% premarket after the telecommunications company reported a third-quarter net loss that missed expectations but revenue that beat forecasts.

Coca-Cola's shares added 3% before the bell after third-quarter revenue beat expectations. Shares of American Airlines slipped 1.9% following a third-quarter decline in revenue.

Align Technology Inc. jumped nearly 26% premarket after the maker of Invisalign teeth aligners reported better than expected third-quarter earnings. It said dentist and orthodontist offices were reopening after Covid-related shutdowns.European markets were lower for the fourth successive day, after German consumer confidence numbers came in weaker than expected. Europe has been struggling with a surge of new Covid-19 cases and fresh restrictions that threaten the region's economic rebound.

"The acceleration in Covid-19 cases which indicates that the top has not been reached yet. The fear is that hospitalizations will suddenly spike and overload hospitals and health workers," said Peter Garnry, head of equity strategy at Saxo Bank.

U.S. existing home sales are expected to rise in September for a fourth straight month when data is released by the National Association of Realtors. The U.S. housing market continues to be propelled by low interest rates.

Investors will also be watching for any surprises when the president and Democratic nominee Joe Biden meet at 9 p.m. ET for the final debate before the election.

"If something big happens it could certainly be a big issue in the markets tomorrow morning" but the likelihood is low, said Mr. Hunter.

In Asia, stocks fell. Japan's Nikkei index dropped 0.7%, South Korea's Kospi fell 0.7% and China's SSE Composite nudged down 0.4%.

In commodity markets, Brent crude, the international benchmark for oil, rose 0.3% to $41.87 a barrel. Gold prices dropped 1.1%.

(END) Dow Jones Newswires

October 22, 2020 09:48 ET (13:48 GMT)

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