Closing Stock Market SummaryThe S&P 500 rose 0.8% on Thursday following an agreement in the Senate that would raise the debt ceiling by $480 billion and give the Treasury enough funds through Dec. 3. The Dow Jones Industrial Average (+1.0%), Nasdaq Composite (+1.1%), and Russell 2000 (+1.6%) outperformed the benchmark index.
After Senate Minority Leader McConnell offered Democrats this pathway yesterday, Senate Majority Leader Schumer confirmed in the morning that a deal was reached with a vote expected to be held soon. Essentially, the market breathed a sigh of relief that the worst-case scenario is likely to be averted, at least for now.
While ten of the 11 S&P 500 sectors closed higher, the market did lose some steam ahead of tomorrow's release of the September Employment Situation report. The S&P 500 also saw some resistance near the underside of its 50-day moving average (4439).
The consumer discretionary (+1.5%), materials (+1.4%), and health care (+1.2%) sectors finished with gains over 1.0%, while the utilities sector (-0.5%) was excluded from the advance,
The Dow Jones Transportation Average (-0.3%) was another area of relative weakness amid concerns that rising fuel costs could eat into profits. WTI crude futures rose 1.1%, or $0.81, to $78.31/bbl following news that the Department of Energy doesn't plan to tap into oil reserves, contrary to prior reporting.
The latest weekly jobless claims figures, meanwhile, showed some improvement. Initial claims decreased by 38,000 to 326,000 (consensus 340,000) while continuing claims decreased by 97,000 to 2.714 million.
The report rekindled selling interest in the longer-end of the Treasury market, causing some curve-steepening activity. The 10-yr yield rose five basis points to 1.57% -- matching a recent high -- while the 2-yr yield increased just one basis point to 0.31%. The U.S. Dollar Index decreased 0.1% to 94.21.
Pfizer (PFE 42.74, +0.72, +1.7%) was another positive influence after announcing it submitted a request to the FDA for emergency use authorization for its COVID-19 vaccine in children 5-11.
Reviewing Thursday's economic data:
- Initial jobless claims for the week ending October 2 decreased by 38,000 to 326,000 (consensus 340,000) while continuing claims for the week ending September 25 decreased by 97,000 to 2.714 million.
- The key takeaway from the report is that the drop in initial claims fits with a view that the labor market is improving along with the trend in COVID cases.
- Consumer credit increased by $14.4 bln in August (consensus $17.0B) after increasing an upwardly revised $17.2 bln (from $17.0 bln) in July.
- The key takeaway from the report is that the expansion in consumer credit in August was the seventh straight increase in total outstanding credit as financing conditions remained favorable with the persistence of low rates.
Looking ahead, investors will receive the Employment Situation report for September and Wholesale Inventories for August on Friday.
- S&P 500 +17.1% YTD
- Russell 2000 +13.9% YTD
- Nasdaq Composite +13.7% YTD
- Dow Jones Industrial Average +13.6% YTD