US stock indices posted strong gains at the close of trading on Thursday, with the S&P 500 hitting a record high. The reason for such stock euphoria was the release of fresh statistics, which showed that the number of applications for unemployment benefits in America decreased compared to last week.
Market participants continue to watch for signs of economic recovery on Friday, despite the high incidence of COVID-19 and the emergence of new strains of coronavirus. The pace of vaccination in the United States is steadily accelerating, which gives hope for a quick restoration of the pre-quarantine standard of living of the population. Also, investors are encouraged by the fact that the excitement around the shares of companies that have become forcedly popular on Internet forums lately has finally subsided.
This resulted in confident positive dynamics at the close of trading on Thursday. The S&P 500 grew by 1.1%, to 3871.74 points, having reported the sixth record in the current year. The Nasdaq Composite rose 1.2%, to 13777.74 points, also hitting a new high. The Dow Jones Industrial Average gained 1.1%, to 31,055.86, just 0.4% below its January 20 high
Last week, the number of Americans applying for unemployment benefits for the first time fell from 847,000 to 779,000 but is still high by historical standards. Labor productivity in the United States fell 4.8% in the fourth quarter, the largest drop since the second quarter of 1981. Labor costs in the United States increased by 6.8% in the last quarter.
The situation with the spread of COVID-19 remains the center of attention of market participants. The number of cases in the US continues to decline - from January 26 to February 1, a daily rate of 144,000 new infections were recorded. Representatives of the Center for Disease Control and Prevention argue that the situation with the pandemic has entered a consistent downward trajectory.
Meanwhile, investors are full of hopes for a speedy solution to the issue of a new package of government incentives in the United States. During his meeting with representatives of the Democratic Party, US President Joe Biden said that he was ready to reduce the circle of people who would receive the stimulus check of $1400. Analysts believe that such a decision by the president may increase the chances of the next bill on anti-crisis measures being passed soon, which will be one of the support factors in the second quarter and beyond.
And now, from abstract reflections to uncompromising numbers.
Shares of Yum! Brands Inc. rose 1.7% after the US restaurant operator cut its net profit by 32% in the 4th quarter. At the same time, the adjusted figure and the company's revenue exceeded the most daring scenarios of analysts.
The price of shares of Merck & Co. dipped 1.7%. The reason for the negative dynamics was the financial indicators that did not justify the optimistic annual forecast.
General Motors Co. was down 0.2% after the automaker announced it was suspending three factories and slowing production at another due to severe semiconductor shortages.
The market capitalization of PayPal Holdings Inc. increased by 7.4%. The American payment system reported an increase in net profit in the 4th quarter of the past year against the background of the acceleration of the introduction of digital payments during the COVID-19 pandemic.
EBay Inc. grew by 5.3% following the report of the Internet auction on the financial indicators exceeding analysts' expectations.
The yield on 10-year US government bonds increased from 1.129% to 1.140%. The pan-European Stoxx Europe 600 was up 0.6%. Most of the leading indicators of the Asia-Pacific markets sank - the Japanese Nikkei 225 lost 1.1%, while the Chinese Shanghai Composite fell 0.4%.
