Dow, S&P 500 Close at Records on Signs of Stimulus Near

Dow, S&P 500 Close at Records on Signs of Stimulus Near

© Reuters.  © Reuters.

By Yasin Ebrahim – The Dow closed at record highs Friday, as lawmakers talked up the prospect of a stimulus deal to shore up the economy amid signs of weakness in the jobs market.

The Dow Jones Industrial Average rose 0.83%, or 248 points to close at a record of 30,218. The S&P 500 was up 0.90%, and the Nasdaq Composite added 0.70%, with both indexes also hitting closing at record highs.

The U.S. economy created just 240,000 jobs in December, missing a forecast for 469,000 new jobs. The unemployment rate fell to 6.7% from 6.9%.

"Today's data underscore the urgent need for additional policy support. Fiscal authorities are clearly better equipped to offer relief, and recent developments are encouraging. If Congress fails to deliver next week, we would expect the Fed to step in. Either way, help is on the way," Jefferies (NYSE:JEF) said in a note.

House Speaker Nancy Pelosi said Friday she held talks with Senate Majority Mitch McConnell about adding the new bipartisan $908 billion coronavirus relief legislation to a government funding omnibus, which must pass within the next week.

A day earlier, McConnell said a compromise was “within reach” on a bipartisan Covid-19 relief package.

Value stocks – those linked to the progress of the economy – were in demand as financials, industrials and energy climbed, with the latter pushed higher by rising oil prices.

Energy stocks jumped more than 5% after OPEC and Russia agreed to raise production by 500,000 barrels per day from January, sending oil prices up more than 1% as investors bet on further tapering of production cuts ahead.

“This is a slower ramp-up than the previously planned 1.9 mb/d January increase … OPEC+ was able to clear the important hurdle of exiting its current cuts in a coordinated way, strongly reducing the tail risk of an OPEC+ taper tantrum,” Goldman Sachs (NYSE:GS) said.

Occidental Petroleum (NYSE:OXY), EOG Resources (NYSE:EOG), and Diamondback Energy Inc (NASDAQ:FANG) were among the biggest gainers, with the latter up about 13%.

Other value sectors of the market that are also sensitive to the economy like financials, industrials, and materials also racked up gains, pushing the broader market higher.

In tech, DocuSign (NASDAQ:DOCU) and Cloudera (NYSE:CLDR) climbed sharply, up 5% and 7% respectively, on better-than-expected quarterly reports.

In other news, Marvell Technology (NASDAQ:MRVL) warning of “industry-wide supply constraints,” offset better-than-expected quarterly results. Its shares fell more than 5%.

“These supply challenges are currently limiting our ability to fully satisfy the increase in demand for some of our networking products,” the company said

The second-straight weekly gains for the market comes in the wake of concerns over a Covid-19 vaccine distribution after Pfizer a day earlier halved its vaccine target for 2020, citing supply chain issues.

But Bank of America (NYSE:) said the announcement from Pfizer Inc (NYSE:PFE) was old news and pharma giant remained on track to roll out 1.3 billion doses by the end of 2021.

"While production is scaling up at an unprecedented pace, we remain confident in the partnership given Pfizer's expertise and valuable know-how in the vaccine space," BofA said.

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