Stocks Add To Record Gains–Again–Despite Disappointing Jobs Data As Market Looks To Biden’s Stimulus Plan

Topline

The economy lost jobs in December for the first time since April, but the three major indexes are tacking on to their Thursday record closes as investors eye President-elect Joe Biden’s economic revitalization plan during his first 100 days in office.

Key Facts

Shortly after the market open, the Dow Jones Industrial Average ticked up 85 points, or 0.3%, while the S&P 500 and the tech-heavy Nasdaq added 0.5% and 0.8%, respectively.

The gains are despite new data Friday from the Labor Department showing that the United States lost 140,000 jobs in December—much worse than economists expected and marking the first monthly decrease in employment since the pandemic forced millions of job losses in April. 

In a Friday morning note, Vital Knowledge Media Founder Adam Crisafulli said the dismal unemployment situation “probably doesn’t mean much” for stocks because job losses were concentrated in Covid-sensitive industries (therefore not necessarily indicative of a broader labor setback) and because Biden’s team is already working on increased fiscal stimulus that should pass given Democrats’ control of Congress.

The New York Times reported Thursday evening that Biden’s aides are moving quickly to draft legislation for an ambitious new stimulus plan that’s expected to include $2,000 stimulus checks for individuals, expanded unemployment benefits and relief for state and local governments–provisions that lost their legs, or fell short of Democrats’ hopes, during negotiations for the recently passed $900 billion package.

Bitcoin, meanwhile, continues its massive ascent, pricing in at around $41,260 Friday after breaking through $40,000 Thursday afternoon; the price has more than doubled in less than one month as heightened government spending reinvigorates concerns that inflation could tank the U.S. dollar.

Shares of Tesla are also still on a massive tear, up nearly 4% Friday (surging 40% over the past month) as experts say Democrats’ clean energy agenda should fuel growth for electric-vehicle makers; competitor Fisker’s stock is up about 2% Friday.

Crucial Quote 

“Stocks are largely extending their gains” as markets move on from the uncertainty in Washington (President Donald Trump conceded late Thursday), Crisafulli said Friday. “The focus is shifting to Biden’s specific economic agenda and whether the Federal Reserve will start to recalibrate its messaging given recent market moves,” he added, noting that “Biden is expected to focus his initial 100 days on economic revitalization, but what exactly this means remains to be seen.”

Key Background

The market rallied to new highs despite the chaos in Washington this week, but it’s not unusual for stocks to brush off major protests and tragedies in the United States. This summer, the S&P nabbed its best 50-day streak in history during the protests and civil unrest in the aftermath of George Floyd’s murder at the hands of a police officer. The index jumped nearly 20% in 1963, the year President John F. Kennedy was assassinated, and it surged an eye-popping 26% in 2003 amid worldwide protests in response to the Iraq war.

What To Watch For

Earnings reports are set to kick into high gear next year. Embattled cruise-line Carnival reports Monday, while similarly struggling Delta Air Lines posts Tuesday. Big bank earnings ramp up later in the week, with Charles Schwab and BlackRock Thursday, followed by JPMorgan Chase, Wells Fargo and Citigroup Friday.

Further Reading

10.7 Million Americans Are Still Unemployed—Rate Stays Flat At 6.7% As Job Market Recovery Stalls (Forbes)

Not Even A Riot At The Capitol Can Keep Stocks Down As Dow, S&P 500 And NASDAQ Hit Record Highs—Again (Forbes)

Democrats In Control Could Usher In A Full Economic Recovery And Another $1 Trillion In Stimulus, But Here’s The Catch (Forbes)

Stocks Add To Record Highs As Goldman Ups Q1 Stimulus Expectations To $750 Billion (Forbes)

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