Stocks ended a choppy session at record highs Friday afternoon as investors attempted to gauge the likelihood of additional stimulus out of Washington.
The three major indices fluctuated between gains and losses throughout the session, at one point turning negative following a report that additional stimulus out of Washington still faced roadblocks within the Senate. The Washington Post reported Friday afternoon that Democratic Senator Joe Manchin of West Virginia said he would “absolutely not” back another round of stimulus checks, suggesting Democratic lawmakers still faced hurdles in advancing more stimulus even with control of the chamber.
Still, the S&P 500 ended at a record closing high, as a weaker-than-expected jobs report Friday morning and Democratic sweep of the Georgia Senate run-off races earlier this week stoked optimism for still-more aid from Washington to support the economy. The index’s one-week gain totaled 1.8% in its first week of trading in 2021. Bitcoin prices held above $40,000, and U.S. crude oil prices buoyed over $51 per barrel.
Equity investors, once concerned about the prospects of a unified Democratic government, had been increasingly warming to the political backdrop solidified after the Georgia Senate runoff elections this week. To many market participants, the new composition of Congress increased the odds of virus relief stimulus advancing in the near-term. Credit Suisse on Thursday upgraded its 2021 outlook for the S&P 500 to 4,200 from 4,050 to imply additional upside of 10.4% from the index’s record close, largely on account of the likelihood for more stimulus and a boost to consumer spending.
The Senate election results also peeled away another layer of uncertainty for markets, allowing traders to move forward with conviction in their investment plans, others said.
“Markets more than anything like clarity, they like certainty. So knowing the results of what the election were yesterday, knowing what this means for the broader composition of government, it allows markets to price in any potential changes and move forward,” Jack Manley, JPMorgan Asset Management global market strategist, told Yahoo Finance on Thursday.
“This is not the Blue Wave that we were talking about leading up to the November presidential election. This is something a lot closer to a Blue Ripple,” he said. “The majorities that we see in both the Senate and the House of Representatives are about as narrow as they possibly can be. It means that more extreme policy changes are still going to be very difficult to enact.”
Markets instead will now be able to focus on the expected economic recovery this year, Manley added. And to that end, Friday’s jobs report from the Labor Department offered a grim snapshot of the economy at the end of 2020, giving a sense of how much ground it will need to make up this year and beyond.
The December jobs report showed the first drop in payrolls since April and an unemployment rate still nearly double that from before the pandemic. Payrolls sank by 140,000 in December, sharply missing the consensus estimate for a gain of 50,000.
“The loss of momentum in the labor market is very clear, and it will continue until COVID restrictions can be eased meaningfully,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note Thursday. “Depending on the pace of vaccinations and the speed of the decline in cases — right now, they’re still rising but will peak very soon — that likely means late February or March at the soonest. That, in turn, suggests no real improvement in the labor market until April.”
4:03 p.m. ET: Stocks shake off earlier brief declines to end higher
Here’s where the three major indices ended Friday’s session:
S&P 500 (^GSPC): +20.89 points (+0.55%) to 3,824.68
Dow (^DJI): +56.84 points (+0.18%) to 31,097.97
Nasdaq (^IXIC): +134.5 points (+1.03%) to 13,201.98
1:38 p.m. ET: S&P 500, Dow turn negative after report Sen. Manchin would oppose increased stimulus payments
Here’s where markets were trading Friday afternoon:
S&P 500 (^GSPC): -11.2 points (-0.29%) to 3,792.59
Dow (^DJI): -197.53 points (-0.64%) to 30,843.60
Nasdaq (^IXIC): +5.86 points (+0.03%) to 13,071.18
Crude (CL=F): +$0.77 (+1.51%) to $51.60 a barrel
Gold (GC=F): -$78.80 (-4.12%) to $1,834.80 per ounce
10-year Treasury (^TNX): +2.7 bps to yield 1.098%
11:45 a.m. ET: Stocks pare some gains Dow turns negative
The three major indices were mixed Friday afternoon, with the Nasdaq and S&P 500 on the rise while the Dow dipped into negative territory.
A 2% drop in shares of 3M (MMM) weighed on the 30-stock index, and shares of Dow components JPMorgan Chase (JPM) and Goldman Sachs (GS) also fell. The broader materials and financials sectors also sank in the S&P 500, unwinding some of their recent rally earlier this week after the Democratic sweep of the Georgia Senate run-offs spurred hopes for more infrastructure investment and firming rates.
10:29 a.m. ET: Wholesale inventories revised up to unchanged in November after jump in October
Wholesale inventories were revised up in November to come in unchanged month-over-month, after inventories were previously reported as dropping 0.1%, according to the Commerce Department.
November’s print follows a jump of 1.3% in inventories in October, as businesses ramped up purchases of inventories they used up over the course of the pandemic.
9:41 a.m. ET: Tesla’s market cap jumps above $800 billion for the first time, as stock sails to another record
Shares of Tesla (TSLA) soared to yet another record high Friday morning, bringing the total market capitalization of the electric-car maker to more than $800 billion for the first time ever.
The stock rose as much as 4.9% Friday morning to $856.42 apiece. Tesla shares have already risen 15.6% for 2021 to date, far outperforming the S&P 500’s 1.3% gain in this year’s first week of trading. Over the last 12 months, Tesla’s stock was up 729%.
9:36 a.m. ET: Stocks open higher, S&P 500 and Nasdaq hit record intraday levels
Here’s where markets were trading shortly after the opening bell Friday:
S&P 500 (^GSPC): +18.63 points (+0.49%) to 3,822.42
Dow (^DJI): +86.05 points (+0.28%) to 31,127.18
Nasdaq (^IXIC): +97.33 points (+0.74%) to 13,166.07
Crude (CL=F): +$0.86 (+1.69%) to $51.69 a barrel
Gold (GC=F): -$27.10 (-1.42%) to $1,886.50 per ounce
10-year Treasury (^TNX): +2.9 bps to yield 1.1%
9:10 a.m. ET: Disappointing payrolls print actually suggests ‘more momentum’ in economy heading into 2021, with losses narrowly concentrated: Capital Economics
The December jobs report’s payroll losses were heavily concentrated in only a couple industries while others saw employment increases, suggesting the U.S. economy was on stronger footing heading into 2021 than the headline figures suggest, said Michael Pearce, senior U.S. economist for Capital Economics.
“The 140,000 drop in non-farm payrolls was entirely due to a massive plunge in leisure and hospitality employment, as bars and restaurants across the country have been forced to close in response to the surge in coronavirus infections,” Pearce said in a note Friday. “With employment in most other sectors rising strongly, the economy appears to be carrying more momentum into 2021 than we had thought.”
“While the fall in headline non-farm payrolls in December was far worse than the consensus estimate (consensus: +71,000; Capital Economics: -100,000) ... it arguably overstates the weakness of the economy,” Pearce said.
Outside of leisure and hospitality, “The report showed broad-based strength, including a 161,000 rise in professional & business services employment, a 38,000 increase in manufacturing payrolls and even a 120,000 gain in retail payrolls,” he added. “In other words, last month’s decline in payrolls does not signal the beginning of a renewed downturn in the economy as a whole.”
8:45 a.m. ET: December jobs report shows first drop in payrolls since April
U.S. job growth turned negative for the first time since April in the final month of 2020, as the pandemic that rocked the economy over the past year dealt yet another blow to the labor market. Payrolls sank by 140,000 in December following an increase of 336,000 in November, and the unemployment rate held steady at 6.7%.
December’s drop in payrolls widened the employment deficit in the labor market from before the pandemic, bringing the economy still more than 9.8 million payrolls short of its February levels. This came even as the payroll gains for each of October and November were upwardly revised by a combined 135,000.
Service-sector jobs especially bore the brunt of the job losses in December, unwinding some of their recent recovery. Leisure and hospitality employment sank by 498,000 jobs during the month after gaining 340,000 between October and November. Education and health services payrolls dropped by 31,000.
7:34 a.m. ET: Moderna shares rise after UK approves COVID-19 vaccine for use
Moderna (MRNA) shares increased nearly 2% in early trading Friday morning after the UK’s healthcare regulatory agency cleared the company’s COVID-19 inoculation for distribution in the country, which has been struggling with a surge in coronavirus cases and a new variant of the virus. This made the Moderna shot the third COVID-19 vaccine to be approved for use in the nation, after the Oxford-AstraZeneca (AZN) and Pfizer-BioNTech (PFE, BNTX) vaccines.
The decision came a day after European Union regulators approved the Moderna vaccine for use in the bloc. The U.S., Canada and Israel also authorized the vaccine for use earlier.
7:18 a.m. ET Friday: Stock futures point to a higher open
Here were the main moves in markets, as of 7:18 a.m. ET Friday:
S&P 500 futures (ES=F): 3,807.00 up 11.5 points or 0.3%
Dow futures (YM=F): 31,015.00, up 73 points or 0.24%
Nasdaq futures (NQ=F): 12,987.25, up 59.25 points or 0.5%
Crude (CL=F): +$0.69 (+1.36%) to $51.52 a barrel
Gold (GC=F): -$19.10 (-1.00%) to $1,894.50 per ounce
10-year Treasury (^TNX): +1.4 bps to yield 1.085%
6:03 p.m. ET Thursday: Stock futures open flat to slightly lower
Here were the main moves in markets, as of 6:03 p.m. ET Thursday:
S&P 500 futures (ES=F): 3,796.25, up 0.75 points or 0.02%
Dow futures (YM=F): 30,940.00, down 2 points or 0.01%
Nasdaq futures (NQ=F): 12,928.00, unchanged