Stocks fell slightly on Thursday, with tech shares declining, as traders awaited the unveiling of a potentially big economic stimulus package.
The Dow Jones Industrial Average slipped 68.95 points, or 0.2%, at 30,991.52. Earlier in the day, the 30-stock average rose more than 150 points. The Nasdaq Composite dipped 0.1% to 13,112.64 after hitting an all-time high earlier in the session. The S&P 500 closed 0.4% lower at 3,795.54.
Shares of Facebook dropped 2.4%. Amazon, Netflix, Microsoft and Apple all declined by more than 1%. Alphabet dipped 0.9%.
President-elect Joe Biden is expected on Thursday evening to unveil a stimulus plan that will include a boost to the recent $600 direct payments, an extension of increased unemployment insurance and support for state and local governments. The stimulus could be as big as $2 trillion, CNN reported. The New York Times, meanwhile, said Biden is expected to outline a $1.9 trillion spending plan.
Adam Crisafulli, founder of Vital Knowledge, wrote that $2 trillion for a stimulus package is “about inline w/expectations,” noting the market has been rallying recently “thanks to ongoing stability in the ‘three pillars’ (stimulus, vaccines, and earnings).”
Sentiment got a boost earlier in the session as trial data published late Wednesday showed that Johnson & Johnson’s one-dose coronavirus vaccine is safe and generates a promising immune response. Shares of Johnson & Johnson climbed 1.8%.
CNBC’s Jim Cramer said the stock market hasn’t accounted for the rosy scenario where the vaccines bring the pandemic under control sometime this year.
“The market has not priced it in. Not at all … I think that the animal spirts of people will override even what we see in the stock market,” Cramer said on “Squawk on the Street.”
However, investors also digested worse-than-expected jobless claims data. First-time claims for unemployment insurance jumped to 965,000 last week, higher than an estimate of 800,000 new claims, according to economists surveyed by Dow Jones.
The market held up in the previous session even as as House members voted to impeach President Donald Trump for a second time — making him the first U.S. president ever to be impeached twice — as a bipartisan majority charged him with inciting a riot in the U.S. Capitol last week.
Wednesday’s slight gains for the S&P 500 and Nasdaq came after Intel rallied nearly 7% to lead tech stocks higher. They also followed U.S. interest rates easing from their highest levels since March 2020. The benchmark 10-year Treasury yield traded at 1.126% on Thursday.
Rates have been rising this year amid the prospects of increased U.S. fiscal stimulus after the Democrats secured majorities in both the House and Senate. Inflation expectations have also been picking up recently. However, Federal Reserve officials have noted that monetary policy will remain easy for the foreseeable future.
“When the time comes to raise interest rates, we’ll certainly do that, and that time, by the way, is no time soon,” said Fed Chairman Jerome Powell on Thursday.
Gregory Faranello, head of U.S. rates at AmeriVet Securities, said “the spigots are open” as the Fed will continue to stimulate the economy. “If they’re going to taper, the world will know it,” he said. But for now, “all talk of tapering has basically been put to rest.”
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