As Washington lawmakers approached a deal to support businesses and individuals amid the coronavirus pandemic, all three major U.S. stock indexes finished at record highs on Thursday.
The Dow Jones Industrial Average DJIA rose 148.83 points, or 0.5%, closing at 30,303.37.
The Nasdaq Composite Index COMP added 106.56 points, or 0.8%, to 12,764.75.
The S&P 500 Index SPX, added 21.31 points, or 0.6%, to 3,722.48.
Mixed results for stocks on Wednesday after the Federal Reserve's promise to continue buying bonds until the economy starts its road to recovery from the COVID-19 pandemic. The Dow finished slightly lower, with the Nasdaq Composite notching a record close and the S&P 500 ending near its all-time closing high.
Investors ignored for the most part Thursday's data which showed a weakness in the economy from the new wave of COVID-19 cases, focusing instead on the possibility of Congressional dealmakers nearing agreement on another round of fiscal aid for unemployed Americans and struggling businesses.
Mitch McConnell, Senate Majority Leader, said on the Senate floor Thursday that it was likely lawmakers would need to work throughout the weekend. Friday is the expiration date for a temporary government funding bill, and has been seen as the final date for aid legislation as well.
Leaders also hope to attach a coronavirus aid deal to a separate $1.4 trillion bill, thus providing full funding for the government until September 2021.
On Wednesday, congressional leaders hinted that they were nearing an agreement regarding a $900 billion economic relief package. The package would include extended unemployment benefits, small business aids and a fresh round of stimulus checks.
As spiking COVID-19 cases trigger new lockdown measures and halt business and consumer activity, pressure is mounting to provide financial aid.
“It is important to have a bridge and some people are definitely going to be impacted without it, but we won’t go into a double dip recession without it,” stated Keith Lerner, chief market strategist and portfolio manager, when referring to a fiscal package.
In an interview Lerner stated, "The big story is reflation: Treasury rates, gold, Bitcoin." He sees no reason why this December shouldn't be a strong month for stocks, adding that the biggest change may be "that when you have elevated expectations you are more vulnerable to bad news."
Economic data published on Thursday in the U.S. emphasized the need for a new round of COVID fiscal spending. U.S. unemployment benefit applications rose in mid-December and hit a nearly four-month high, indicating rising layoffs and economical damage caused by a record increase in coronavirus cases. Continuing state claims fell 273,000 to a 1.55 million rate.
Michael Hewson, chief market analyst of CMC Markets UK, wrote on Thursday that "It would appear that the claims numbers are starting to accelerate higher in a further sign that the US labor market is starting to deteriorate, as we look toward 2021,".
The Philadelphia Fed manufacturing index registered a 6-point fall from 32.3 in November to 26.3 in December, slightly above expectations of a 24.5 reading.
U.S. home builders commenced construction on homes at a rate of 1.55 million in November, a 1.2% increase from the previous month. Housing starts were up nearly 13% compared to last year and the building permit applications was the highest in 14 years.