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US STOCKS-Wall St ends higher in renewed rally on hopes of further stimulus

Herbert Lash
·3 min read

* Biden says economic package to be trillions of dollars

* Senator Manchin dashes expectations a bit

* Nonfarm payrolls fall in December

* Tesla market cap tops $800 bln for the first time (Adds market close at 4 p.m.)

By Herbert Lash

Jan 8 (Reuters) - The S&P 500 and Nasdaq scaled new highs on Friday as hopes of more stimulus from Washington were shaken by a senator's comments but later bolstered after U.S. President-elect Joe Biden said his economic package will be in the trillions of dollars.

The latest rally in equities overcame labor market data early in the day that showed the U.S. economy shed jobs for the first time in eight months in December.

But late in the session, the S&P retreated slightly from a its most recent peak following a report that Democratic U.S. Senator Joe Manchin opposed bigger direct checks before addressing the coronavirus pandemic. The remarks threw cold water on investor hopes for further stimulus payments.

"It’s amazing how sensitive we are to the slightest tweaking of when and how big the stimulus will be," said Ed Moya, senior market analyst at OANDA in New York.

"Stocks are going to start to price in a bigger economic relief package from the Biden administration," Moya said. "That is going to continue to be the driver on equities."

Biden said his administration's economic package will also include unemployment insurance and rent forbearance.

The package will be unveiled next Thursday, he said.

"It is necessary to spend the money now," Biden told reporters. "The answer is yes, it will be in the trillions of dollars, an entire package."

Positive COVID-19 vaccine data and expectations of a bigger fiscal package and infrastructure spending under a Democratic-led U.S. Congress have pushed the S&P 500 above 3,800 points for the first time, and set all three major indexes on track for weekly gains.

Seven of the 11 major S&P sectors dropped, with economy-linked financials, materials and industrials, which have outperformed their peers and scaled record levels this week, dropping more than 1%.

Market participants looked past a report that congressional Democrats plan to introduce articles of impeachment against President Donald Trump on Monday, after a violent crowd of Trump supporters stormed the U.S. Capitol on Wednesday.

Unofficially, the Dow Jones Industrial Average rose 56.84 points, or 0.18%, to 31,097.97, the S&P 500 gained 20.89 points, or 0.55%, to 3,824.68 and the Nasdaq Composite added 134.50 points, or 1.03%, to 13,201.98.

The S&P 500 closed above 3,800 points for the first time on Thursday, while the Dow and the Nasdaq posted their fourth straight weekly gains.

Electric car-maker Tesla Inc jumped, taking its market capitalization to more than $800 billion for the first time ever.

U.S.-listed shares of Baidu gained on plans to form a company to make smart electric vehicles, according to two sources familiar with the matter. (Reporting by Herbert Lash, additional reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Marguerita Choy)