By Yasin Ebrahim
Investing.com – The Dow notched gains Thursday, led by value stocks like energy and financials, on hopes the economy is set to get a much needed fiscal boost after House Speaker Nancy Pelosi suggested an agreement on stimulus was nearing the finish line.
The Dow Jones Industrial Average rose 0.35%, or 99 points. The S&P 500 was up 0.32%, while the Nasdaq Composite added 0.01%.
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. These differences, however, are unlikely to meet a speedy resolution in talks, White House Chief Economic Advisor Larry Kudlow said.
Still, an agreement on a bill could meet opposition from Senate GOP leader Mitch McConnell, who would need some swaying from President Donald Trump, Pelosi said on Wednesday.
In another boost to sentiment on the economy, jobless claims fell below 700,000 for the first since the pandemic began.
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 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 nearly 3% as oil prices clawed back some of their losses from a day earlier, when a jump in gasoline supplies intensified fears of a weakening demand outlook.
Financials, meanwhile, were pushed higher by sharp uptick in banking stocks as the favorable backdrop of rising Treasury yields continued.
Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC) were up more than 2%, while JPMorgan Chase (NYSE:JPM) climbed 3%.
The earnings parade gathered pace as mega blue chips reported quarterly performance.
Tesla Inc (NASDAQ:TSLA) eased from session highs to trade up more than 2% 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 results that were not as bad as feared as both American Airlines (NASDAQ:AAL) and Alaska Air Group Inc (NYSE:ALK) revealed narrowed than expected quarterly losses.