By Jem Bartholomew and Ben Eisen 

U.S. stocks rose Thursday after economic data showed an improving economy and investors monitored negotiations in Washington over a fresh stimulus bill that could further support the recovery.

Investors have been laser-focused on the prospect of a new wave of U.S. fiscal stimulus, even as the prospects of a deal between House Democrats and Senate Republicans before the Nov. 3 presidential election remains unlikely.

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

The S&P 500 rose 17.93 points, or 0.5%, to 3453.49. The Dow Jones Industrial Average climbed 152.84 points, or 0.5%, to 28363.66. The tech-heavy Nasdaq Composite rose 21.31 points, or 0.2%, to 11506.01.

Investors and analysts see a new injection of stimulus as key to reviving the U.S. economy, which is beginning to recover from its deep recession.

The number of Americans applying for unemployment benefits fell to 787,000 last week, according to data from the Labor Department, suggesting the number of layoffs are trending lower. And sales of previously owned homes in the U.S. rose to a new 14-year high in September, the National Association of Realtors said Thursday.

Still, with the effects of the last round of stimulus fading, some investors are preparing for the economy to plateau.

"As much as the data was good, I think we may see a little bit of a short-term sag in economic momentum in the fourth quarter," said Dave Donabedian, chief investment officer of CIBC Private Wealth Management.

Investors largely agree that more stimulus is coming at some point soon. "It would seem likely whoever wins that there'll be some form of fiscal stimulus in the next few months," said Tristan Hanson, multiasset fund manager at M&G Investments. "That seems to be the mood music."

Shares in beaten-down airlines, which could benefit from a stimulus package, rallied Thursday. Delta Air Lines rose $2.22, or 7%, to $33.72. Southwest Airlines added $2.09, or 5.2%, to $41.93. Airline executives said they are seeing tentative signs that consumers are traveling again, though the companies posted big losses in the third quarter.

Hilton Worldwide Holdings jumped $5.42, or 6.1%, to $94.39. MGM Resorts International rose $1.21, or 5.7%, to $22.62.

Corporate earnings also lifted shares of individual companies. Tesla rose $3.15, or 0.7%, to $425.79, after the electric-car maker reported its fifth consecutive quarter of profits after years of losses.

Shares of AT&T rose $1.56, or 5.8%, to $28.28, after the telecommunications company reported a third-quarter loss that missed expectations but revenue that beat forecasts.

Coca-Cola shares added 69 cents, or 1.4%, to $50.68, after third-quarter revenue beat expectations.

Align Technology, the S&P 500's best performer, jumped $117.42, or 35%, to $453.23, 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.

Investors will also be watching for any surprises when the president and Democratic nominee Joe Biden meet Thursday night 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 of Capital Economics.

Overseas, the pan-continental Stoxx Europe 600 fell 0.1%. The U.K.'s FTSE 100 was up 0.2% after the government set additional support for companies affected by new coronavirus restrictions. Europe has been struggling with a surge of new Covid-19 cases and fresh restrictions that threaten the region's economic rebound.

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

In commodity markets, Brent crude, the international benchmark for oil, rose 1.7% to $42.46 a barrel. Gold prices dropped 1.2% to close at $1901.10 a troy ounce.

Write to Ben Eisen at ben.eisen@wsj.com

 

(END) Dow Jones Newswires

October 22, 2020 17:04 ET (21:04 GMT)

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