A sign is taped to the window of a closed Bath & Body Works store.
Angela Weiss/AFP via Getty Images
Stocks were rising Thursday morning and were largely unchanged even after a dismal employment report.
Initial jobless claims for the past week came in at 885,000, worse than estimates of 818,000 and worse than the prior reading of 862,000. Newly imposed lockdowns as virus cases have spiked have led to more layoffs.
Still, stocks maintained their ground. The S&P 500 was up 0.5% midmorning. Large-capitalization tech stocks, which have an outsize impact on the S&P’s movements, were pushing the S&P higher, with Apple (AAPL) up 1% and Facebook (FB) up 0.7%.
But stocks were exhibiting a broad rally across sectors, including economically sensitive stocks, underscoring investors’ belief that economic weakness won’t last beyond the next few months. The Equal Weighted S&P 500 Index, which weights the movements of all stocks equally, rose 0.4%. Vanguard S&P 500 Value Index Fund ETF (VOOV), the constituents of which are more sensitive to changes in the economic outlook than growth stocks are, rose 0.3%.
One theme recently has been that investors are overlooking weak economic data because not only will the expected billions of doses of Covid-19 vaccines help reopen the economy, but a $908 billion fiscal stimulus package is expected to tide households and small businesses over with cash until vaccinations become widespread.
Pent-up demand is potentially building. Consumers have also saved tons of cash of late, so the added stimulus would only ready them even more for a strong rate of spending in 2021.
Over the past month, jobless claims have risen and so have stocks. After a steep decline in claims from the March spike, initial jobless claims rose from roughly 700,000 a month ago—the lowest level during the pandemic—to a tick under 900,000 this week, a graph from economists at Citigroup shows. In the past month, the Equal Weighted S&P 500 Index is up 3.7%.
For now, investors are watching fiscal stimulus and vaccine developments.
Write to Jacob Sonenshine at [email protected]
