The market opened lower on Thursday after another 1.1 million Americans filed for unemployment amid the coronavirus pandemic, but stocks pared back losses and finished positive thanks to a rally in Big Tech stocks.
The Dow Jones Industrial Average was up 0.2%, nearly 50 points, on Thursday, while the S&P 500 rose 0.3% and the tech-heavy Nasdaq Composite gained 1.1%.
Sentiment initially took a hit—with the Dow opening 150 points lower—from disappointing economic data: Jobless claims jumped to 1.1 million last week, more than the 920,000 expected, according to the Labor Department.
The sharp uptick from the 963,000 claims in the previous week shows just how vulnerable the labor market still is as the coronavirus continues to weigh heavily on the U.S. economy.
The market did pare back some of its early losses, however, after news of upcoming trade talks between the U.S. and China: The Chinese commerce ministry announced on Thursday that trade officials from both sides would resume negotiations and review the phase one trade deal in the coming days.
A rally in major tech stocks also helped offset disappointing economic data: Shares of Facebook, Amazon, Netflix, Apple, Microsoft and Alphabet all gained more than 1%
Shares of Tesla, meanwhile, jumped more than 6% to a new all-time high of over $2,000 per share: The electric car maker’s stock has risen more than 21% this week and a whopping 375% so far this year.
The S&P 500 finished at a record closing high on Tuesday, officially ending the 2020 bear market. The index briefly hit a new intraday record high on Wednesday, but stocks turned negative late in the day after the Federal Reserve released the minutes from its July meeting. Fed officials said that the coronavirus pandemic will continue to “weigh heavily” on the U.S. economy, which continues to remain “well below” of its pre-pandemic levels.
Big number: 28 million
That’s how many people are receiving some form of government unemployment benefits, according to the Labor Department.
“Even amidst the worst labor market in modern history, Congress has not agreed to extend emergency unemployment benefits or the moratorium on evictions… politicians should focus on Main Street,” says Ron Temple, head of U.S. equity at Lazard Asset Management. “The absence of $17 billion per week of jobless benefits as well as protection from eviction is likely to cause negative repercussions for the broader economy if not corrected.”
What to watch for
A great deal of uncertainty still remains around the next coronavirus stimulus bill in Washington: Treasury Secretary Steven Mnuchin recently criticized top Democrats for failing to “strike a reasonable deal,” but also suggested that talks could resume this week.
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