Wall Street pauses at record highs after Biden inauguration

(Reuters) – Wall Street’s main indexes edged up to record highs on Thursday, propelled by optimism about more pandemic relief under the Biden administration to support the economy after data showed a tepid labor market recovery.

FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of New York, U.S., January 13, 2021. REUTERS/Shannon Stapleton

The number of Americans filing new applications for unemployment benefits dipped to 900,000 last week but still remained stubbornly high as the COVID-19 pandemic tears through the nation, raising the risk that the economy will shed jobs for a second straight month in January.

(GRAPHIC: Jobless claims – )

But other data showed the housing and manufacturing sectors as areas of strength to help buttress the economy.

“The market is hopeful that the Biden administration will continue to increase fiscal stimulus. Because interest rates and inflation haven’t accelerated, this is giving him confidence that he could do even more,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

By 2:08 p.m. ET (1908 GMT), the Dow Jones Industrial Average rose 21.19 points, or 0.07%, to 31,209.57, the S&P 500 gained 4.75 points, or 0.12%, to 3,856.6.

The Nasdaq Composite gained 71.238 points, or 0.53% to 13,528.486, boosted by a jump in shares of megacap stocks such as Alphabet Inc, Apple Inc and Amazon.com Inc ahead of their earnings reports in the coming weeks.

It follows Netflix Inc’s blowout results on Wednesday that revitalized the “stay-at-home” beneficiaries, adding $262 billion in overall market capitalization to the FAANG group of stocks.

“It’s interesting that the stay-at-home technology companies have retaken leadership. It shows that there are concerns that exiting the pandemic will be a bit bumpier and might take longer,” Arone added.

In a reversal of the trend earlier this month, the Russell 1000 growth index, which includes technology stocks, is this week far outperforming the Russell 1000 value index, which is heavily comprised of cyclical stocks such as financials and energy.

President Joe Biden has launched some initiatives during his initial days in office, including ramping up testing and vaccine rollouts.

Technology, consumer discretionary and communication services which includes Alphabet and Facebook, were the only S&P sectors in green.

Energy, financial and industrial stocks, which have helped the S&P 500 rally 14% since the Nov. 3 presidential election, were among the weaker sectors for the session.

With valuations near a 20-year high, corporate results could present an important test of whether the stock market rally has run ahead of fundamentals.

Earnings at S&P 500 companies are expected to rise by 24% in 2021 after falling 15% in 2020, according to Refinitiv data as of Jan. 15.

United Airlines Holdings Inc dropped 5.29% after posting a fourth straight quarterly loss due to the COVID-19 pandemic but said it aims to cut about $2 billion of annual costs through 2023.

Ford Motor Co jumped 6.72% extending gains for a second straight day after Deutsche Bank raised its price target on the U.S. automaker’s stock.

Declining issues outnumbered advancing ones on the NYSE by a 1.48-to-1 ratio; on Nasdaq, a 1.30-to-1 ratio favored decliners.

The S&P 500 posted 19 new 52-week highs and no new lows; the Nasdaq Composite recorded 180 new highs and five new lows.

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