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Investors will get a key piece of economic data on Friday morning when the Labor Department releases its monthly jobs report for December. Economists surveyed by Dow Jones have penciled in a meager gain of 50,000 jobs for the period, but some fear that the report could actually show a net loss of jobs after many areas reinstated economic restrictions to slow the spread of the pandemic.
Stocks started off the new year with a slump on Monday, but the market has since churned higher despite the turmoil in Washington, where a riot at the Capitol on Wednesday delayed the procedural Congressional confirmation of Presidential-elect Joe Biden’s victory. The Dow and S&P 500 have notched three-day winning streaks.
This week also saw Democrats win two key Senate races in Georgia, according to NBC News projections, boosting hopes on Wall Street for further fiscal stimulus.
Thursday night, President Donald Trump acknowledged for the first time that a new administration will take over on Jan. 20.
Fundstrat’s Tom Lee said on “Closing Bell” said that growing clarity in Washington and the amount of cash sitting on the sideline could lead the stocks higher, with cyclical stocks in particular benefitting.
“If we look at just the first few days of this year, the leadership has come from things energy and the cyclicals, including financials and industrials, or even discretionary excluding Amazon. I think that’s kind of a precursor to what the full year will look like,” Lee said.
The strategist also said that stocks “could make a really big move” in the coming weeks as the level of fear in the market declines.
Gary Schlossberg, a global strategist at the Wells Fargo Investment Institute, said the market’s recent moves could be reinforced by growth in corporate earnings this year.
“We think that some of the optimism will be manifested to some extent by improved earnings growth, and maybe the market is pricing in some of that as well of late, but we still think that gives the market some added mileage,” Schlossberg said.
In addition to the new jobs report, investors will also get new data on wholesale inventories and consumer credit on Friday to better chart the path of economic recovery.
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