Stocks Waver After Jobless Claims Data
January 21 2021 - 10:33AM
Dow Jones News
By Caitlin Ostroff
U.S. stocks wobbled Thursday after jobless claims data remained
high, indicating the labor market was struggling to recover amid
the coronavirus pandemic.
The S&P 500 and Dow Jones Industrial Average swung between
small gains and losses in early morning trading, with both losing
steam after opening higher for the day. The broad benchmark S&P
500 traded flat, while the Dow lost about 20 points, or 0.1%.
One bright spot: The technology-heavy Nasdaq Composite, which
gained 0.2%, propelled higher by companies including Apple and
Amazon.com.
All three major indexes notched new all-time-highs Wednesday,
but investor enthusiasm seemed to slow after fresh data showed
Thursday that 900,000 Americans filed first-time claims for
unemployment benefits for the week ended Jan. 16, as companies
continued to lay off workers amid a surge in Covid-19 cases.
Meanwhile, the U.S. reported 4,200 deaths for Wednesday, the
second-highest daily number ever.
Still, many investors are betting on an economic recovery this
year as Covid-19 vaccinations ramp up, increasing prospects for
future earnings. Traders are watching earnings closely to see if
they support the strong run across markets in recent months.
Shares of Travelers, a major property-casualty insurer, climbed
3.7% after it logged an increase in quarterly profit and a modest
rise in net written premiums. Regional bank KeyCorp rose 2.2% after
it recorded higher revenue and a larger profit, with increased
activity in its consumer-mortgage and investment-banking businesses
driving fees.
Chip giant Intel and International Business Machines are slated
to report results after markets close.
"Earnings season looks relatively good and seems to confirm this
picture that the U.S. -- because there was no full lockdown -- did
well in the fourth quarter," said Carsten Brzeski, ING Groep's
global head of macro research. "Stock markets are really looking
through the short-term outlook for the economy, which has worsened
over recent days."
Investors are paying close attention to corporate guidance in
the sectors most affected by the pandemic. Shares of United
Airlines fell 5.4% after the airliner said on Wednesday it expected
the coronavirus to continue to weigh on travel demand this
year.
Supporting markets is the expectation that central banks and
governments will step in if financial conditions deteriorate. This
has encouraged investors to seek out higher returns, including in
overseas markets.
Japan's Nikkei 225 Index rose 0.8% Thursday and is trading near
its highest level in 30 years. India's benchmark stock gauge, the
S&P BSE Sensex Index, hit a record high Wednesday. Indexes in
China and South Korea rallied Thursday, with the Shanghai Composite
up 1.1% and Korea's Kospi gaining 1.5%.
The backstop from governments and central banks -- plus
consensus among investors for a strong economic recovery this year
-- has squeezed volatility out of the market. The Cboe Volatility
Index, known as the VIX and seen as Wall Street's fear gauge, was
at 21.70 Thursday, down from 25.16 a month ago.
A day after President Biden was inaugurated, money managers are
keeping a close eye on his proposed Covid relief package, and the
prospects for it proceeding through Congress.
While stocks have taken their cue from the stimulus plans,
investors in bonds have been more skeptical of a big spending push,
keeping yields relatively subdued, said Daniel Morris, BNP Paribas
Asset Management's chief market strategist.
The yield on the benchmark 10-year Treasury note ticked up to
1.106% Thursday, from 1.089% Wednesday. Yields rise when bond
prices fall.
"At least one part of the market is saying 'nice idea,' but if
you really thought you'd get $1.9 trillion in stimulus, yields
would be higher," said Mr. Morris.
Overseas, the pan-continental Stoxx Europe 600 rose 0.2%.
Meanwhile, the European Central Bank held steady on interest
rates.
-- Caitlin McCabe contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
January 21, 2021 10:18 ET (15:18 GMT)
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