Wall Street’s main indexes were in a tug of war between optimism and pessimism on Thursday as mixed economic news vied for investor sentiment.
The Dow and S&P 500 opened lower on Thursday after data released before the opening bell showed layoffs in the United States remain stubbornly high. The news added to a cloud of concern hovering over the markets including waning hope that Congress will pass more fiscal stimulus, growing COVID-19 cases and a messy political season that keeps getting uglier.
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After the open of trading though, some good news greeted traders after data showed continuing strength in the nation’s housing market – a key driver of economic growth.
By mid-morning trading on Wall Street, the Dow Jones Industrial Average was up 0.26 percent at 26,831.57. The S&P 500 – a gauge for the health of US retirement and college savings reports – was up 0.45 percent while the tech-heavy Nasdaq Composite Index was up 0.73 percent.
According to the US Labor Department, some 870,000 Americans – a surprising increase – applied for unemployment benefits in the week ending September 19. The data signals that labour market recovery is plateauing and the road back to pre-pandemic strength could be longer than many had thought in recent months.
The lagging recovery in the nation’s jobs market has seen Federal Reserve officials nudge Congress for more fiscal stimulus to keep aid struggling businesses and households and keep the recovery on track.
Fed Chair Jerome Powell appealed to lawmakers on Wednesday “to stay with it” in working together to nurse the economy back to some semblance of health.
But government aid money for businesses is virtually tapped out and many of the pandemic relief programmes are scheduled to expire at the end of the year.
That includes the nationwide moratorium on evictions. A giant swath of Main Street has been in pain for months while Wall Street has rallied, but now even the markets are starting to feel nervous about the future.
Sectors that were able to postpone or avoid furloughs in the early weeks and months of the pandemic are starting to let workers go. Banks and tech companies are looking to lay off thousands. The airline industry has asked for more financial aid from the government to avoid letting go of tens of thousands of workers next week.
“We think it is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution,” Goldman analysts wrote in a brief on Thursday, as they lowered their Q4 gross domestic product (GDP) growth forecast from 6 percent to 3 percent on a quarterly annualised basis.
The tech rally that propped the New York Stock Exchange during the earlier months has levelled off in the last several weeks leaving investors scratching their heads and looking elsewhere for opportunity.
But tech continues to be a go-to default for investors. Shares of Apple, Amazon, Netflix and Alphabet were all higher in mid-morning trading on Wall Street.
Tesla continued its slide for the third straight day following a “Battery Day” presentation by Chief Executive Officer Elon Musk that failed to impress. Shares of the electric vehicle makers were down 1.71 percent.
Shares of electric truck start-up Nikola continued its sharp drop, tumbling another 15.88 percent as Wedbush downgraded the stock to “underperform”.