Topline
Stocks tacked on to record highs Thursday after President Joe Biden signed the sixth coronavirus aid package into law–a promising developing that’s sure to kick the economic recovery into overdrive, just hours after an uplifting unemployment report and better-than-expected earnings for recently embattled companies.
President Joe Biden speaks during an event with the CEOs of Johnson & Johnson and Merck on March 10.
Key Facts
The Dow Jones industrial average and S&P 500 both closed at record highs, climbing 188 points, or 0.6%, and 1%, respectively, while the tech-heavy Nasdaq surged 2%, landing about 5% below a February high.
Technology stocks continue to rebound: Dating app Bumble jumped 11% after its first earnings report, Tesla 5% and giants Apple, Facebook and Amazon all roughly 2%.
Heading up losses in the S&P, shares of software giant Oracle fell 6.5% after CEO Safra Catz delivered softer-than-expected earnings guidance for the fourth quarter in a Wednesday evening conference call; the firm posted quarterly revenue of $10.1 billion, falling in line with average analyst expectations.
Meme stock AMC, meanwhile, soared 4% after the theater chain reported quarterly results that were better than analysts feared, including revenue that fell 89% year over year–instead of an expected 90% drop–and a loss per share of $3.15, about 10% lower than expectations.
On the jobs front, weekly unemployment data showed another 712,000 Americans filed new claims for jobless benefits last week, down about 5% from the prior week but still incredibly high by historical standards.
Global stocks, meanwhile, were fairly tepid Thursday: the United Kingdom’s FTSE 100 remained virtually flat, while France’s CAC 40 ticked up 0.7%.
Key Background
Stocks started to pare back recent losses this week after the Senate passed President Joe Biden’s $1.9 trillion stimulus plan. The move was particularly helpful for technology stocks, which have floundered in recent weeks over concerns that rising Treasury yields could sway investors from risky equities.
Tangent
Cailin Birch, a global economist at The Economist Intelligence, said in a note Thursday that the mild drop in weekly unemployment claims will likely boost markets, but emphasized that the U.S. labor market is still far from a full recovery. “The real unemployment rate, accounting for discouraged workers who have stopped seeking employment, is closer to 10%, rather than the official rate of 6.2%.”
Surprising Fact
“Given that the most recent reading of the personal savings rate is a healthy 20.5%, our expectation is that a portion of the stimulus money makes its way into equities,” Cliff Hodge, a chief investment officer at North Carolina-based Cornerstone Wealth said Wednesday, citing a recent Deutsche Bank survey finding that respondents plan to plow nearly 40% of their stimulus money into the stock market. “The last time around, flows went into more speculative areas of the market, including SPACs, Reddit stocks and high-growth momentum, so it wouldn’t surprise us to see something similar.”
Further Reading
Unemployment Claims Dropped To 712,000 Last Week (Forbes)
Dow Jumps Nearly 500 Points After House Passes Biden’s $1.9 Trillion Stimulus (Forbes)
Roblox Valuation Hits $42 Billion As Gen-Z Gaming Giant Skyrockets 50% In Public Market Debut (Forbes)
U.S. Budget Deficit Hits $1 Trillion With More Massive Stimulus Set To Hike Up Spending (Forbes)
