Wall Street’s main indexes were set to open at record highs on Thursday as investors counted on more pandemic relief and speedy vaccine rollouts under the Biden administration to support the economy after data showed a weakening labor market recovery.
The number of Americans filing for unemployment benefits was 900,000 in the latest week, the Labor Department’s report said. The elevated reading was likely due to a relentless surge in COVID-19 cases across the country.
“Investors are looking at (unemployment) as a temporary situation than a permanent one, as the expectation is that easy money is going to eventually trickle down to those that are not working,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.
Democrats took control of the U.S. Senate on Wednesday and Republicans in the Congress signaled a willingness to work on Biden’s $1.9 trillion stimulus plan that would enhance jobless benefits and provide direct checks to households.
President Joe Biden is expected to launch an array of initiatives during his initial days in office, including ramping up testing and vaccine rollouts.
Wall Street’s main indexes ended at all-time highs in the previous session, when Biden took office, with the S&P 500 recording a 14% jump since the Nov. 3 presidential election.
Gains during the period were recorded from economy-linked stocks to shares of solar-powered companies.
“Low interest rates, stimulus, and the earnings season so far are keeping the markets going,” said Nolte while warning that the stock market “across the board is very expensive and should correct here a little bit.”
With valuations near a 20-year high, corporate results could present an important test of whether the stock market rally has run ahead of fundamentals.
Earnings of S&P 500 companies are expected to rise by 24% in 2021 after falling 15% in 2020, as per Refinitiv data as of Dec. 15.
At 09:00 a.m. ET, Dow E-minis were down 11 points, or 0.04% and S&P 500 E-minis were up 0.75 points, or 0.02%. Nasdaq 100 E-minis were up 24.25 points, or 0.18%.
United Airlines Holdings Inc dropped about 2% in premarket trade after posting a fourth straight quarterly loss due to the COVID-19 pandemic but said it aims to cut about $2 billion of annual costs through 2023.
Baker Hughes Co climbed about 3% as it joined larger rival Halliburton Co in saying that the energy industry’s worst downturn in decades should bottom out this year.
Pipeline operator Kinder Morgan Inc rose 2.6% after beating Wall Street estimates for quarterly results even as it raised concerns over the pace of ramp-up in spending in top U.S. shale basins following a rebound in oil prices.
Ford Motor Co added 4% and was set to extend gains for a second straight day after Deutsche Bank raised its price target on the U.S. automaker’s stock.
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