The Dow Jones Industrial Average extended gains Thursday afternoon, while the S&P 500 and Nasdaq Composite continued to trade in record territory, after President Joe Biden said he had reached a deal with a bipartisan group of lawmakers on an infrastructure plan.
What are major indexes doing?
-
The Dow Jones Industrial Average
DJIA,
+1.03%
rose 315.43 points, or 0.9%, to 34,189.67. -
The S&P 500
SPX,
+0.68%
was up 27.56 points, or 0.7%, at 4,269.40, trading above its record close of 4,255.15 set on June 14 and more than erasing the dip that followed last week’s Federal Reserve meeting. -
The Nasdaq Composite
COMP,
+0.77%
advanced 90.94 points, or 0.6%, to 14,362.67.
On Wednesday, the Nasdaq rose 0.1% to eke out its second consecutive record close, its 16th of 2021, while the Dow edged down 71.34 points, or 0.2% and the S&P 500 fell 0.1%.
What’s driving the market?
“We have a deal,” Biden told reporters outside the White House after hosting an Oval Office meeting with a bipartisan group of U.S. senators who had put together a framework for an agreement.
The blue-chip Dow pushed to a new session high after Biden’s remarks, while the S&P 500 industrials and materials sectors, seen sensitive to increased infrastructure spending, also added to gains.
An agreement in principle before lawmakers departed for the July 4 break had been seen as a possibility, “but as long as the package sits in the summer sun, the more it will attract opposition,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note.
“It will take weeks to iron out all of the details, and then the suspense will rise — could this attract 60 votes in the Senate, avoiding a filibuster?” he wrote.
Details, including how to pay for the plan, still need to be worked out. Recent talks between lawmakers had focused on how to fund the package, which had been expected to feature $579 billion in new spending and an overall price tag of nearly $1 trillion over five years. Some estimates put the latest figure for new spending at $559 billion.
Earlier, data on first-time U.S. unemployment benefit applications disappointed. Initial claims fell 7,000 to 411,000 in the week ended June 19. Economists had looked for a fall to 380,000.
“The labor market remains lumpy and uneven, so the only real takeaway is that removing fiscal and monetary support too early is the biggest risk to the recovery,” said Jamie Cox, managing partner for Harris Financial Group
“Although this doesn’t solidify any ‘transitory’ argument, it does anchor markets to pay more attention to the labor market for cues on the future path of rates,” Cox said.
Stocks were buoyed earlier this week as Federal Reserve Chairman Jerome Powell emphasized on Tuesday that the central bank still expected to see inflation pressures to prove transitory. Analysts said some steam came out of the market in Wednesday’s session after Federal Reserve Bank of Atlanta President Raphael Bostic said he pulled forward “my projection for our first move to late 2022,” following a similar comment on interest rates last week from St. Louis Reserve President James Bullard.
In other U.S. economic data, May durable-goods orders climbed 2.3% in May though core capital goods orders slipped.
The advanced trade deficit in goods widened to $88.1 billion in May from $85.7 billion the previous month. Core capital goods orders declined 0.1% in May. And a revised estimate of first-quarter gross domestic product left the rate of growth unchanged at an annual rate of 6.4%.
The pace of growth in the U.S. economy in the first quarter remained unrevised at a 6.4% annualized rate after the latest revision, the Commerce Department said Thursday.
“Stock markets have even better prospects through year-end,” said Brad McMillan, chief investment officer for Commonwealth Financial Network, in his midyear outlook. “The economy is likely to keep growing at a fast pace, and the government will continue to provide fiscal and monetary stimulus,” he said. “As such, corporate earnings are likely to keep growing — and to push markets higher.”
Richmond Fed President Thomas Barkin said Thursday that he thinks U.S. inflation pressures will prove temporary but that the central bank needs to watch prices closely.
Several other Fed officials are slated to speak over the course of the day, including Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, New York Fed President John Williams and St. Louis Fed President James Bullard.
Which companies are in focus?
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Rite Aid Corp.
RAD,
-13.98%
shares fell 14%, after the drugstore chain on Thursday beat fiscal first-quarter profit expectations but came up short on revenue, amid weakness in the pharmacy services business, while also providing a mixed full-year outlook. -
Darden Restaurants Inc.
DRI,
+3.40%
on Thursday said it turned a profit for the fiscal fourth quarter as same-restaurant sales, or those at restaurants open 16 months or longer, rose 90.4%, nearing pre-pandemic levels. The company added 30 net new restaurants during the period. Darden shares rose more than 3%. -
Shares of Accenture PLC
ACN,
+2.01%
rose 1.7%, after the management consulting company on Thursday reported fiscal third-quarter profit and revenue that beat expectations. Accenture also raised its full-year outlook, citing demand for digital transformation. -
FedEx Corp.
FDX,
+1.95%
suspended about 1,400 customers of its freight-shipping service earlier this month, The Wall Street Journal reported Thursday, a move that surprised customers and was aimed at easing a congested network taxed by relentless package volume. Service to some customers was resumed this week. Shares were up 1.6%. -
Chinese electric-car maker Xpeng Inc.
XPEV,
-1.51%
said Thursday it is planning a global offering of 85 million Class A shares, split between an international offering of 80.75 million shares and a Hong Kong offering of 4.25 million shares. - BuzzFeed Inc. is close to a deal to go public through a merger with a special-purpose acquisition company, The Wall Street Journal reported late Wednesday, part of a plan to consolidate other players in digital media.
-
Microsoft
MSFT,
+0.45%
gained after launching its Windows 11 operating system designed to update the software that long ruled the PC market for an era when the use of apps on smartphones and tablets increasingly dominate people’s interaction with technology.
What are other markets doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.486%
rose 1 basis point to 1.488%. Yields and debt prices move in opposite directions. -
The ICE U.S. Dollar Index
DXY,
+0.00%,
a measure of the currency against a basket of six major rivals, was little changed. -
Oil futures edged higher, with the U.S. crude benchmark
CL00,
+0.29%
up 0.1% at $73.16 a barrel. Gold futures
GC00,
-0.35%
flipped between small gains and losses, off 0.4% in recent action at $1.775.80 an ounce -
In European equities, the pan-Continental Stoxx 600
SXXP,
+0.87%
rose 0.9%, while London’s FTSE 100
UKX,
+0.51%
finished with a gain of 0.5%. -
In Asia, the Shanghai Composite
SHCOMP,
+0.01%
and Japan’s Nikkei 225
NIK,
+0.00%
both ended fractionally higher, while the Hang Seng Index
HSI,
+0.23%
rose 0.2% in Hong Kong.
