U.S. Markets Top Record Highs on Stimulus Hopes

Jobless claims spike

Stop me if you've heard this one before, but U.S. equity markets hit and topped all-time highs as investors are pretty sure we will see a stimulus bill passed by lawmakers in Washington before the weekend. Both the S&P 500 and Nasdaq hit intraday and closing records, and the Dow posted its highest-ever close. Home builders like Lennar Corp. and Pulte Homes led the gains, along with Tesla, which joins the S&P 500 on Monday.

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The stimulus bill in question totals around $900 billion, and reportedly includes direct payments of up to $600 for individuals as well as $350 billion for small businesses. It's a skinny version of what both Republicans and Democrats wanted, but we should consider it an appetizer for a bigger bill once the Biden administration takes office. 

The appetizer can't come soon enough as 885,000 Americans filed for first-time unemployment claims last week — the highest weekly number since September (more below). Unemployment benefits for 13 million Americans expire at the end of December unless a new bill is passed that extends them. 

Investors have been shrugging this news off since April. Markets were choppy to begin December, but momentum is back in the equity market and the best trading days of December are just beginning. 

Jobless Claims Spike

This is an unfortunate trend heading in the wrong direction. The number of workers seeking unemployment benefits increased to a three-month high last week in another sign the economy is entering a winter slowdown as coronavirus cases rise and new business restrictions are in effect across the country. 

Initial unemployment claims increased for the second straight week to 885,000 last week, according to the Labor Department, marking the highest level for claims since September when 893,000 workers applied for jobless benefits. 

While claims are down sharply from nearly reaching 7 million in March, the four-week moving average is increasing after trending downward since the spring. Part of this is due to a seasonal slowdown in hiring, but it is being severely compounded by more business closures as COVID-19 cases continue to top record highs.

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