Stocks shake off a wobbly start, end higher
U.S. stocks overcame a wobbly start to finish higher Thursday, as traders welcomed more corporate quarterly results for the summer that weren’t as bad as Wall Street feared.
The S&P 500 rose 0.5 percent after shifting between small gains and losses throughout the morning. The index recouped all of its losses from a day earlier, but remains on track for its first weekly loss after notching a gain in each of the previous three weeks.
Health care companies, banks, and communication services stocks accounted for most of the gains. Energy stocks also rose as the price of U.S. crude oil pushed 1.6 percent higher. Those gains outweighed losses by technology companies and elsewhere in the market. Treasury yields rose, a sign that investors are feeling better about the economy.
After a downbeat start, stocks wobbled for a bit as traders weighed encouraging economic new data on weekly U.S. unemployment aid claims and September home sales. The indexes flipped into the green by midafternoon after House Speaker Nancy Pelosi said that negotiations for another round of economic stimulus were progressing.
The day’s gyrations echo the market’s meandering trading in recent weeks as investors gauge the chances of Washington reaching a deal on more support for the economy. Time is running out to get something done before the election, which has dimmed some of the optimism that Democrats and Republicans will soon strike a bargain on an aid package.
“I have very low expectations for a stimulus deal, but the economic news and corporate earnings news is pretty good, and that’s encouraging,” said Phil Orlando, chief equity strategist at Federated Hermes.
The S&P 500 rose 17.93 points to 3,453.49. The Dow Jones Industrial Average gained 152.84 points, or 0.5 percent, to 28,363.66. The Nasdaq composite added 21.31 points, or 0.2 percent, to 11,506.01.
Smaller company stocks fared better than the rest of the market.
The Russell 2000 small-cap index climbed 26.48 points, or 1.7 percent, to 1,630.25.
Investors have been hoping Washington will provide more aid for the economy, which continues to struggle due to the pandemic. The last round of beefed-up aid for unemployed Americans expired at the end of July. Any compromise will likely face stiff resistance from Republicans in the Senate.
Pelosi and Treasury Secretary Steven Mnuchin have been negotiating daily this week on a possible aid package. On Thursday, Pelosi said that progress is still being made.
“Help is on the way. It will be bigger, it will be better, it will be safer and it will be retroactive,” she said.
A piece of such a deal could include extra benefits for workers who lost their jobs due to the coronavirus pandemic. A report on Thursday morning showed that 787,000 workers applied for unemployment benefits last week.
While that’s still an incredibly high number relative to history, it’s down from 842,000 the prior week. It also was not nearly as bad as economists were expecting.
The number of workers continuing to get jobless benefits is likewise easing from its pandemic-era peak. That’s a sign that some people have been able to find new jobs, but it also shows that others are simply using up the last of their state unemployment benefits.