Dow Jumps Another 100 Points as $1.9 Trillion Stimulus Plan Continues to Boost Market

Dow Jumps Another 100 Points as $1.9 Trillion Stimulus Plan Continues to Boost Market

Written by Jonathan Ponciano of Forbes 

Stocks are climbing Thursday after a promising unemployment report and better-than-expected earnings for recently embattled companies–all while President Joe Biden’s $1.9 trillion stimulus plan makes its way to the Oval Office, giving investors hope for recently floundering tech giants like Tesla, Amazon and Apple.

Key Facts

  • Shortly after the market open, the Dow Jones industrial average, which closed at a record high Wednesday, climbed 96 points, or 0.3%, while the S&P 500 jumped 0.7% and the recently resurgent tech-heavy Nasdaq jumped 1.7%, though it remains about 7% below a February high.
  • Technology stocks continue to rebound: Dating app Bumble is up 11% after its first earnings report, Tesla is up 4% and giants Apple, Facebook and Amazon are all climbing more than 1%.
  • Heading up losses in the S&P, shares of software giant Oracle are falling 6% after CEO Safra Catz delivered softer-than-expected earnings guidance for the fourth quarter in a Wednesday evening conference call; the firm posted quarterly revenue of $10.1 billion, falling in line with average analyst expectations.
  • Meme stock AMC, meanwhile, is soaring 7% after the theater chain reported quarterly results that were better than analysts feared, including revenue that fell 89% year over year–instead of an expected 90% drop–and a loss per share of $3.15, about 10% lower than expectations.
  • On the jobs front, weekly unemployment data showed another 712,000 Americans filed new claims for jobless benefits last week, down about 5% from the prior week but still incredibly high by historical standards.
  • Global stocks, meanwhile, were fairly tepid Thursday: the United Kingdom’s FTSE 100 remains virtually flat, while France’s CAC 40 ticks up 0.2%.

Key Background
Stocks surged Wednesday after the House voted in favor of President Joe Biden’s $1.9 trillion stimulus plan, sending the bill to the president’s desk for an expected Friday signature. The move mostly boosted stocks in industries hit hard by the pandemic, with the Dow closing nearly 2% higher, while the Nasdaq stayed virtually flat.

Cailin Birch, a global economist at The Economist Intelligence, said in a note Thursday that the mild drop in weekly unemployment claims will likely boost markets, but emphasized that the U.S. labor market is still far from a full recovery. “The real unemployment rate, accounting for discouraged workers who have stopped seeking employment, is closer to 10%, rather than the official rate of 6.2%.”

Surprising Fact
“Given that the most recent reading of the personal savings rate is a healthy 20.5%, our expectation is that a portion of the stimulus money makes its way into equities,” Cliff Hodge, a chief investment officer at North Carolina-based Cornerstone Wealth said Wednesday, citing a recent Deutsche Bank survey finding that respondents plan to plow nearly 40% of their stimulus money into the stock market. “The last time around, flows went into more speculative areas of the market, including SPACs, Reddit stocks and high-growth momentum, so it wouldn’t surprise us to see something similar.”

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This is for informational purposes only. Cornerstone Wealth is not associated with Forbes. Investment advisory services offered through Cornerstone Wealth Group, LLC dba Cornerstone Wealth, an SEC registered investment adviser.