By Yasin Ebrahim
Investing.com – The Dow closed higher Thursday, as value stocks plugged the gap left by a fall in tech stocks on signs of progress on stimulus after House Speaker Nancy Pelosi suggested a deal was close.
Gilead Sciences Inc (NASDAQ:GILD) jumped 4% in after-hours trading after the FDA approved its anti-viral drug.
The Dow Jones Industrial Average rose 0.55%, or 154 points. The S&P 500 was up 0.55%, while the Nasdaq Composite added 0.57%.
Pelosi said a deal on stimulus “just about there," though added that key issues including state and local funding as well as liability protection were yet to be resolved.
Still, as any eventual stimulus proposal would need backing from congress, there is likely to be further stumbling blocks ahead. Senate GOP leader Mitch McConnell has expressed concerns over the size of the deal on the table, believed to be around $1.9 trillion, still below the Democrats' $2.2 trillion proposal, preferring instead to roll out targeted relief measures.
In another boost to sentiment on the economy, jobless claims fell below 800,000 for the first since the pandemic struck in mid-March.
The Labor Department said 787,000 people filed for unemployment insurance, down 55,000 from the prior week's downwardly revised 842,000, and well above economists' forecast for 870,000.
Some economists, however, questioned whether the trend will continue in the wake of rising Covid-19 cases.
"[W]e doubt it will continue as Covid infections spread rapidly, pushing down demand for discretionary consumer services, especially in the hospitality sector," Pantheon Macroeconomics said in a note.
The renewed hopes for the economic recovery to continue, however, triggered a climb in value stocks with financials and energy in the ascendency.
Energy jumped 4% as oil prices clawed back some of their losses from a day earlier, when a jump in gasoline supplies intensified fears of demand weakening.
Financials, meanwhile, were pushed higher by a sharp uptick in banking stocks as the favorable backdrop of rising Treasury yields continued.
Wells Fargo (NYSE:WFC) added 2%, while Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) climbed more than 3%.
The earnings parade gathered pace as mega blue chips reported quarterly performance.
Tesla Inc (NASDAQ:TSLA) eased from session highs to end nearly 1% after the electric automaker said it was on track to for 500,000 deliveries this year, and reported quarterly results that beat on both the top and bottom lines.
Coca-Cola Company (NYSE:KO) added 1% after its better-than-expected quarterly results suggested the worst of the hit from pandemic was in the rearview mirror as sales fell 6% in the quarter, a marked improvement from the 26% slump in the second quarter.
Airlines, among the hardest hit sectors from the pandemic, reporting mixed results as American Airlines (NASDAQ:AAL) reported narrower-than-expected results, while Alaska Air Group Inc (NYSE:ALK) revealed deeper losses, though said it had cut its cash burn.
Tech was among the biggest decliners on the day as the fab 5 traded slipped. Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB) were below the flatline, while Microsoft (NASDAQ:MSFT) finished flat and Google-parent Alphabet (NASDAQ:GOOGL) rose 1%.
On the vaccine front, The Federal Food and Drug Administration approved Gilead (NASDAQ:GILD)'s remdesivir to treat patients with COVID-19 requiring hospitalization. "The drug is now widely available in hospitals across the country, following early investments to rapidly expand manufacturing capacity to increase supply," the company said.