U.S. stocks rose modestly Thursday, with the S&P 500 index pushing back into record territory as investors sifted through a busy round of economic data, including a disappointing read on weekly jobless claims.
Signs of progress by a bipartisan group of U.S. lawmakers on an infrastructure-spending proposal were also in focus.
What are major indexes doing?
On Wednesday, the Nasdaq rose 0.1% to eke out its second consecutive record close, its 16th of 2021, while the Dow edged down 71.34 points, or 0.2% and the S&P 500 fell 0.1%.
What’s driving the market?
Data on first-time U.S. unemployment benefit applications disappointed. Initial claims fell 7,000 to 411,000 in the week ended June 19. Economists had looked for a fall to 380,000.
“The labor market remains lumpy and uneven, so the only real takeaway is that removing fiscal and monetary support too early is the biggest risk to the recovery,” said Jamie Cox, managing partner for Harris Financial Group
“Although this doesn’t solidify any ‘transitory’ argument, it does anchor markets to pay more attention to the labor market for cues on the future path of rates,” Cox said.
Members of a bipartisan group of U.S. lawmakers holding talks on a roughly $1 trillion infrastructure proposal said they had agreed to a framework for a package, with plans to meet with President Joe Biden on Thursday to finalize the deal which could ultimately mean further fiscal stimulus for the economy.
“An agreement in principle is possible today before Congress leaves town for the two-week July 4 break, but as long as the package sits in the summer sun, the more it will attract opposition,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note.
“It will take weeks to iron out all of the details, and then the suspense will rise — could this attract 60 votes in the Senate, avoiding a filibuster?” he wrote.
Stocks were buoyed earlier this week as Federal Reserve Chairman Jerome Powell emphasized on Tuesday that the central bank still expected to see inflation pressures to prove transitory. Analysts said some steam came out of the market in Wednesday’s session after Federal Reserve Bank of Atlanta President Raphael Bostic said he pulled forward “my projection for our first move to late 2022,” following a similar comment on interest rates last week from St. Louis Reserve President James Bullard.
In other U.S. economic data, May durable-goods orders climbed 2.3% in May though core capital goods orders slipped.
The advanced trade deficit in goods widened to $88.1 billion in May from $85.7 billion the previous month. Core capital goods orders declined 0.1% in May. And a revised estimate of first-quarter gross domestic product left the rate of growth unchanged at an annual rate of 6.4%.
The pace of growth in the U.S. economy in the first quarter remained unrevised at a 6.4% annualized rate after the latest revision, the Commerce Department said Thursday.
“Stock markets have even better prospects through year-end,” said Brad McMillan, Chief Investment Officer for Commonwealth Financial Network in a midyear outlook. “The economy is likely to keep growing at a fast pace, and the government will continue to provide fiscal and monetary stimulus,” he said. “As such, corporate earnings are likely to keep growing—and to push markets higher.”
Richmond Fed President Thomas Barkin said Thursday that he thinks U.S. inflation pressures will prove temporary but that the central bank needs to watch prices closely.
Several other Fed officials are slated to speak over the course of the day, including Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, New York Fed President John Williams and St. Louis Fed President James Bullard.
Which companies are in focus?
What are other markets doing?