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Stocks hover at record levels despite 'not good' economic news

Ambar Warrick and Medha Singh

By Ambar Warrick and Medha Singh

(Reuters) - Apple pushed the S&P 500 and Nasdaq higher on Thursday, with the benchmark index nearing an all-time high, as jobless claims fell below one million for the first time since efforts to curb the COVID-19 outbreak in the United States began five months ago.

The S&P 500 briefly traded above its record closing high of 3,386.15 and was 0.3% away from its intraday record high of 3,393.52 registered in February.

The blue-chip Dow was weighed down by a 11.3 slump in Cisco Systems Inc <CSCO.O> after the company forecast first-quarter revenue and profit below estimates.

Apple Inc <AAPL.O> rose 2.4% to about $463.09, less than $5 a share shy of hitting $2 trillion in market capitalization.

Initial claims for state unemployment benefits decreased to 963,000 for the week ended Aug. 8, the lowest level since mid-March but the expiration of a $600 weekly jobless supplement at the end of July likely contributed to the decline.

Data last week showed the economy has regained only 9.3 million jobs of the 22 million jobs lost between February and April, indicating that it faces a long road to reach pre-pandemic levels.

Jobless claims ‘still not good’

But Wall Street has recovered most of the trillions in market capitalization lost during the start of the pandemic and the tech-heavy Nasdaq <.IXIC> was the first of the three major indexes to hit a record high in June. The Dow is about 5.6% below its February peak.

"Our take on a new high, if it happens, is that it's another reminder to investors how disconnected the stock market and the economy have been this year. The stocks have soared but economy – it's improved, yes – but a million initial claims is still not good," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

Weekly unemployment insurance claims came in below 1 million for the first time since March during the week ended Aug. 8. (David Foster/Yahoo Finance)
Weekly unemployment insurance claims came in below 1 million for the first time since March during the week ended Aug. 8. (David Foster/Yahoo Finance)

Meanwhile, markets continued to hold on to hopes the Democrats and the White House would reach an agreement for a stimulus to help the economy recover. Unemployment benefits have been a sticking point in their talks.

The U.S. presidential election is also expected to add another layer of uncertainty into markets, with roughly 12 weeks remaining until Election Day.

At 13:06 p.m. ET, the Dow Jones Industrial Average <.DJI> was down 37.90 points, or 0.14%, at 27,938.94 and the S&P 500 <.SPX> was up 2.99 points, or 0.09%, at 3,383.34. The Nasdaq Composite <.IXIC> was up 92.37 points, or 0.84%, at 11,104.61.

Consumer discretionary <.SPLRCD>, technology <.SPLRCT> and communication services <.SPLRCL> were among the few advancing S&P sectors.

"The fact that interest rates are so low, people really have no place to put money," said Kevin Miller, chief investment officer of Minnesota-based E-Valuator Funds.

"A lot of the larger companies that make up the S&P 500 have a heavy cash position, they really have strong free cash flow, so it's a magnet for investor dollars."

AMC Entertainment Holdings Inc <AMC.N> jumped 17% after the firm said it will start its first phase of reopening theaters in the United States from Aug. 20, covering more than 100 venues.

Tapestry Inc <TPR.N> fell 2.6% even as it beat quarterly sales estimates.

Declining issues outnumbered advancers for a 1.07-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and no new low, while the Nasdaq recorded 53 new highs and 16 new lows.


(Reporting by Ambar Warrick and Medha Singh in Bengaluru; Editing by Arun Koyyur and Uttaresh.V)