- US equities gained in frothy Thursday trading as investors digested revived stimulus hopes and rising COVID-19 case counts.
- New-home purchases reached an annualized rate of 1 million in August, its fastest rate since 2006. The data drove indexes out of negative territory in morning trading.
- House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin restarted stimulus talks on Thursday, with the Trump administration official noting that more aid is “still needed.”
- Still, rising COVID-19 cases globally weighed on sentiments and revived fears of local lockdowns.
- Oil erased losses and swung higher on the encouraging economic data. West Texas Intermediate crude jumped as much as 1.1%, to $40.37 per barrel.
- Watch major indexes update live here.
US stocks gained in volatile Thursday trading as investors weighed strong housing data and a restart in stimulus discussions against revived virus concerns.
Equities retraced early losses and swung higher after the Census Bureau reported the pace of new-home sales jumped 4.8% to an annualized rate of 1 million units. That pace is the fastest since 2006 and extends the housing market’s winning streak into its fourth month.
Traders also cheered restarted stimulus negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. The White House official told the Senate Banking Committee on Thursday that a second deal is “still needed” and revealed he and Pelosi are still discussing ways to pass a new package.
House Democrats are drafting a $2.4 trillion proposal as the window to pass timely stimulus closes, Bloomberg reported.
Here’s where US indexes stood after the 4 p.m. market close on Thursday:
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A Thursday morning slide briefly erased the S&P 500’s year-to-date gains and sent the benchmark index into correction territory, implying a more than 10% decline from recent highs. The index pared losses following the release of new-home sales data.
Rising COVID-19 infection rates in the US renewed fears of another virus wave halting economic activity. Case counts began to drop in July but have since swung higher amid reopenings.
Elsewhere on the economic data front, unemployment benefit filings disappointed. New weekly jobless claims unexpectedly jumped to 870,000 in the week ended on Saturday. Economists had expected claims to sink to 840,000. Claims have hovered near this level since August as hiring has slowed and stimulus measures expired.
Continuing claims, which track the aggregate number of Americans receiving unemployment benefits, decreased slightly, to 12.6 million. The reading still exceeded the economist estimate of 12.3 million.
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“The momentum in the labor market is stalling,” Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said in a note. “Against this backdrop, the need for further fiscal action is obvious, but we no longer expect any meaningful relief bill until February.”
E.W. Scripps leaped after Warren Buffett’s Berkshire Hathaway announced a $600 million equity investment into the firm. The stake will help finance the television network company’s takeover of ION Media.
Nikola shares plunged further after Wedbush analysts slapped the stock with its first “sell” rating. The firm cited its founder Trevor Milton’s unexpected departure and execution risks for their bearish outlook. Wedbush also lowered its price target for Nikola to $15 from $45, implying a 29% drop over the next 12 months from Wednesday’s closing level.
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Thursday’s decline came after a 525-point drop for the Dow on Wednesday. Fed officials’ warnings of a faltering economic bounce-back prompted a late sell-off. Tech giants led the drop and drove the Nasdaq composite to underperform its peers.
Spot gold rose as much as 0.7%, to $1,877.20 per ounce, after stumbling in the morning. The US dollar erased gains, and Treasury yields wavered.
Oil futures reversed losses and gained through the day. West Texas Intermediate crude climbed as much as 1.1%, to $40.37 per barrel. Brent crude, oil’s international standard, traded mostly unchanged after falling 1.2%, to $41.27 per barrel, at intraday lows.
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Video: Stocks extend slide at open with the S&P 500 erasing year-to-date gain (CNBC)