By Geoffrey Smith
Investing.com -- U.S. stock markets opened with modest gains on Thursday, as a sharp drop in initial jobless claims assuaged worries that there will be no agreement on further fiscal support for the economy until after the election.
By 9:35 AM ET, the Dow Jones Industrial Average was up 46 points, or less than 0.2%, at 28,257 points. The S&P 500 was up 0.2%, while the Nasdaq Composite outperformed with a gain of 0.5%. All three indexes had fallen on Wednesday in response to signs from Capitol Hill that progress on a fresh stimulus package wasn't fast enough to allow it to be voted on before Nov. 3.
The Nasdaq's outperformance was due in part to Tesla (NASDAQ:TSLA) stock, which rose 3.0% after the company reported another solid profit for the third quarter after the closing bell on Wednesday. However, it gave up around one-third of its after-hours gains on analysts' concerns that it is losing market share in the electric vehicle segment as the competition heats up.
Earlier, the Labor Department had said that initial jobless claims fell below 800,000 for the first time in over six months last week, a better-than-expected result that reflected up-to-date filings from California for the first time this month. However, with less than two weeks to go before the election, over 23 million people nationwide are still claiming some kind of unemployment-related benefit.
"The decline is material," said Ian Shepherdson, chief economist with Pantheon Macroeconomics. "But we doubt it it will continue as Covid infections spread rapidly, pushing down demand for discretionary consumer services, especially in the hospitality sector.
Shepherdson noted that Initial claims in Wisconsin, which publishes daily claims numbers, have closely tracked the state’s huge surge in Covid-19 cases over the past month.
"We see no reason to expect the national picture to be much different, so we would not be at all surprised to see claims start head higher over the next few weeks," Shepherdson said.
On a busy morning for corporate earnings, AT&T (NYSE:T) stock rose 5.7% after it posted a strong quarter for its key wireless unit, adding some 645,000 new subscribers net. The company also reported a sharp acceleration in signups for its HBO Max streaming service, which offset revenue declines at its traditional media business due to the pandemic.
Coca Cola stock rose 1.9% and Whirlpool (NYSE:WHR) stock rose 4.2% after both those companies also reported better-than-expected earnings, but Kimberly-Clark (NYSE:KMB) stock fell 6.2% to a four-month low after a set of results that showed how its sales of tissue to offices had slumped as companies asked people to work from home. Chipotle Mexican Grill (NYSE:CMG) stock also fell 6.5% after it reported falling profits despite higher revenue, an illustration of how delivery and other pandemic-related additional costs have eaten into margins during the pandemic. The company also declined to give any further guidance, citing pandemic-related uncertainty.