Wall Street’s main indexes were set to rise on Thursday as investors bet on more fiscal stimulus to ride out a coronavirus-driven recession with data showing a nascent recovery in the labor market was stalling.
The number of Americans filing new applications for unemployment benefits were 793,000 last week, compared to 812,000 in the prior week, but they are well below the record 6.867 million reported last March when the pandemic hit the United States.
Wall Street’s main indexes had hit record highs recently on prospects of a $1.9 trillion coronavirus relief package to jumpstart the economy with market participants pivoting to economy-linked energy and bank stocks from tech-related names.
A largely better-than-expected earnings season has also lifted the sentiment, quelling fears of lofty valuations. Analysts now expect fourth-quarter earnings for S&P 500 firms to grow 2.8%, versus a forecast of 10.3% drop at the beginning of January, per Refinitiv data.
“The earnings continue to propel the market higher along with stimulus talks and Fed’s willingness to stay tact is creating a very strong enthusiasm,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“(But) the trading pattern over the past several days suggests that the market may be suffering from fatigue and has stepped in very overbought situation.”
Pictet Group’s asset management arm expects the S&P 500 to rise 10% from its current levels, with help from improving economic growth and easy monetary policy.
Federal Reserve Chairman Jerome Powell reassured investors on Wednesday that interest rates will remain low for some time to spur the economy and jobs growth, but provided no new insights on monetary policy.
At 8:39 a.m. ET, Dow e-minis were up 76 points, or 0.24%, S&P 500 e-minis were up 13.5 points, or 0.35%, and Nasdaq 100 e-minis were up 70.75 points, or 0.52%.
Pinterest Inc rose 7.1% premarket after a report said Microsoft Corp approached the image-sharing company in recent months about a potential buyout. The negotiations were, however, currently not active, according to the report.
PepsiCo Inc rose 0.6% after the snack and beverage giant topped analyst estimates for fourth-quarter revenue and said it expects organic revenue to grow in 2021 as economies reopen and COVID-19 vaccinations roll out.
Casino operator MGM Resorts dropped 2.4% after posting a bigger-than-expected loss, hurt by COVID-19 travel restrictions but signaled a pickup in demand later this year.
U.S.-listed shares of cannabis companies including Tilray and Aphria jumped between 11% and 13% after the sector caught the attention of retail traders on Wednesday on forums such as Reddit’s WallStreetBets that had fueled GameStop’s recent rally.
Walt Disney Co edged 0.2% lower ahead of its results after market close, when the media company will update Wall Street about its digital subscriber membership and the future of its pandemic-hobbled theme parks.