Stocks finished slightly lower on Thursday as U.S. lawmakers remained at odds over the next coronavirus relief bill and weekly unemployment claims came in below a million for the first time since the coronavirus crisis began.
The Dow Jones Industrial Average was down 0.3%, nearly 100 points, by midday on Thursday, while the S&P 500 was down 0.2% and the tech-heavy Nasdaq Composite gained 0.3%.
The market pared back early losses after better-than-expected unemployment data: The Labor Department said that 963,000 Americans filed initial jobless claims last week, well below the 1.1 million new claims economists were expecting.
Thursday’s numbers are down from 1.2 million claims the prior week and it’s the first time since March that claims have dipped below one million, although the labor market’s recovery still has a long way to go.
Sentiment took a hit as Democrats and Republicans remain deadlocked over a new coronavirus relief package: White House economic adviser Larry Kudlow told CNBC Thursday that talks were at a “stalemate” and that Democrats are “asking for too much money” in the next bill.
Shares of companies that would benefit from a reopening of the economy—including airlines, cruise operators and retailers—struggled on Thursday, while Big Tech stocks like Apple and Facebook moved slightly higher.
Shares of Lyft, meanwhile, fell over 5% after the company reported a 61% drop in revenue during the second quarter.
Investors are still expecting another stimulus package will eventually get passed: “The market still wants, and very much expects, an actual stimulus bill to be signed,” according to Tom Essaye, editor of the Sevens Report. “Looking forward, stimulus bill negotiations will continue, but [Trump’s] executive orders (combined with recently solid data) likely reduce the urgency to get something done, so realistically the market will be looking for an agreement over the next few weeks.”
“Seeing initial claims dip below 1 million is a positive sign that layoffs are easing, but we’re far from celebrating a steady recovery,” says Glassdoor senior economist Daniel Zhao. “With no sign yet of a new [coronavirus] relief package, the question is whether sheer momentum can keep pushing the economic recovery forward in this historically deep crisis.”
What to watch for
Markets also grappled with ongoing U.S.-China tensions, after Secretary of State Mike Pompeo hinted that the United States could take further action against Chinese tech companies. Pompeo said that President Trump’s executive orders signed earlier this month—to ban U.S. transactions with Chinese-owned apps WeChat and TikTok—could be “broader” than just those two companies.
The market finished higher on Wednesday amid optimism for a coronavirus vaccine, with gains being led by a strong rally in tech stocks. The S&P neared a new record close after jumping 1.4%, finishing the day just below its previous high (set back in February) of 3,386.15.
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