The stock market finished higher on Thursday, despite another 1 million Americans filing for weekly unemployment, as the Federal Reserve unveiled a new inflation policy that will keep interest rates lower for a longer period of time.
The Dow Jones Industrial Average was up 0.6%, over 150 points, on Thursday, while the S&P 500 rose 0.2% and the tech-heavy Nasdaq Composite fell 0.3%.
The Dow briefly turned positive for 2020, before paring back gains somewhat: The index has now climbed nearly 57% from the market’s low point in March.
Jobless claims came in above 1 million for the second week in a row, which was in line with Wall Street expectations, according to new data from the Labor Department.
Investors closely watched a speech from Fed chairman Jerome Powell, who on Thursday announced a “robust updating” of policy in which the Federal Reserve will allow inflation to run “moderately” above its long-running 2% goal.
The central bank’s new approach to inflation is meant to support the labor market and broader economy by keeping interest rates lower for a longer period of time.
Walmart shares jumped almost 5% after news that the retail giant will team up with Microsoft for the tech company’s bid to buy TikTok, with a deal expected to be announced in the coming days.
U.S. GDP for the second quarter, meanwhile, was revised down to show a slightly lower decline than first expected: The second reading shows a decline of 31.7%, compared to an initial reading last month of 32.9%.
“Albeit slow, the number of initial jobless claims continues to trend lower,” says Charlie Ripley, senior investment strategist for Allianz Investment Management. “While any improvement is a positive sign, the pace of declining claims will likely remain a concern for the Fed who has continuously portrayed a gloomy outlook for the U.S. economy.” He adds that while the Fed has “done what it can to support the recovery,” it’s likely that Chairman Powell “reiterates the need for additional fiscal stimulus” from Congress during his speech today.
Stocks have continued to hit new record highs in recent weeks, led by a rally in high-flying tech stocks. The S&P 500 rose 1% on Wednesday to hit a new record close of 3,478, while the Nasdaq jumped 1.7% and also hit a new high. Wednesday’s gains put the S&P up 58% from its coronavirus pandemic low point on March 23, while the Nasdaq has soared 75% over that period.
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