Stocks traded along the flatline on Thursday, with tech shares declining, as traders awaited the unveiling of a potential big economic stimulus package and weighed more positive vaccine news.
The S&P 500 traded just below breakeven, giving up an earlier gain. The Dow Jones Industrial Average was up just 48 points. Earlier in the day, the 30-stock average had gained more than 150 points. The Nasdaq Composite traded just 0.3% higher after rising as much as 0.7% and hitting an all-time high earlier in the day.
Shares of Facebook and Microsoft each fell more than 1%. Amazon, Netflix and Alphabet were also lower on the day.
President-elect Joe Biden is expected on Thursday evening to unveil a stimulus plan that will include a boost to the recent $600 direct payments, an extension of increased unemployment insurance and support for state and local governments. The stimulus could be as big as $2 trillion, CNN reported.
Adam Crisafulli, founder of Vital Knowledge, wrote that $2 trillion for a stimulus package is “about inline w/expectations,” noting the market has been rallying recently “thanks to ongoing stability in the ‘three pillars’ (stimulus, vaccines, and earnings).”
Early trial data published late Wednesday showed that Johnson & Johnson’s one-dose coronavirus vaccine is safe and generates a promising immune response.
CNBC’s Jim Cramer said the stock market hasn’t accounted for the rosy scenario where the vaccines bring the pandemic under control sometime this year.
“The market has not priced it in. Not at all … I think that the animal spirts of people will override even what we see in the stock market,” Cramer said on “Squawk on the Street.”
However, investors also digested worse-than-expected jobless claims data. First-time claims for unemployment insurance jumped to 965,000 last week, higher than an estimate of 800,000 new claims, according to economists surveyed by Dow Jones.
The market held up in the previous session even as as House members voted to impeach President Donald Trump for a second time — making him the first U.S. president ever to be impeached twice — as a bipartisan majority charged him with inciting a riot in the U.S. Capitol last week.
Wednesday’s slight gains for the S&P 500 and Nasdaq came after Intel rallied nearly 7% to lead tech stocks higher. They also followed U.S. interest rates easing from their highest levels since March 2020.
The benchmark 10-year note yield traded at 1.13% on Thursday after hitting a high of 1.18% earlier this week.
Rates have been rising this year amid the prospects of increased U.S. fiscal stimulus after the Democrats secured majorities in both the House and Senate. Inflation expectations have also been picking up recently. However, Federal Reserve officials have noted that monetary policy will remain easy for the foreseeable future.
“When the time comes to raise interest rates, we’ll certainly do that, and that time, by the way, is no time soon,” said Fed Chairman Jerome Powell on Thursday.
Gregory Faranello, head of U.S. rates at AmeriVet Securities, said “the spigots are open” as the Fed will continue to stimulate the economy.
“If they’re going to taper, the world will know it,” he said. But for now, “all talk of tapering has basically been put to rest.”
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