S&P 500, Nasdaq hit record highs as stimulus hopes outweigh dire jobs report

(Reuters) – The S&P 500 and the Nasdaq scaled new highs on Friday, as hopes of more economic stimulus to ride out a pandemic-led downturn eclipsed concerns over a significant loss of pace in a labor market recovery.

FILE PHOTO: Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar

The U.S. government’s employment report showed the economy shed jobs for the first time in eight months in December as the country buckled under an onslaught of COVID-19 infections.

“We have the solution to the virus and as we get that solution out into the country and shots into people’s arms, I don’t think (jobs report) would be a real headwind,” said Ross Mayfield, investment strategy analyst at Baird.

A backstop of nearly $900 billion in stimulus approved by the government last week, positive vaccine data and expectations of a bigger fiscal package and infrastructure spending under Democratic-led U.S. Congress have pushed Wall Street’s main indexes to all-time highs.

“The party in control is going to want to inject a lot of stimulus and spending into the economy which in the near-term will be good for economic growth and the market is pleased with the result,” Mayfield said.

Six of the 11 major S&P sectors rose, with healthcare and consumer discretionary hitting record highs.

Economy-linked financials, materials and industrials which have outperformed their peers and scaled record levels earlier this week, slipped on Friday.

The blue-chip Dow eased from its record level, weighed down by heavyweights Goldman Sachs and 3M Co, but was still set for its fourth straight weekly gain.

The S&P 500 closed above 3,800 points for the first time on Thursday, while the Nasdaq is tracking its best weekly gain in four.

Some Wall Street bankers, however, expect a pullback in the near-term as exuberance from unprecedented monetary and fiscal stimulus have led to “frothy” asset prices.

Market participants looked past mounting calls among congressional Democrats for impeaching President Donald Trump for a second time, two days after his false claims of election fraud helped encourage a mob that stormed the U.S. Capitol.

At 11:36 a.m. ET the Dow Jones Industrial Average fell 80.08 points, or 0.26%, to 30,961.05, the S&P 500 gained 6.19 points, or 0.16%, to 3,809.89 and the Nasdaq Composite gained 78.76 points, or 0.60%, to 13,146.27.

Electric car-maker Tesla Inc’s shares jumped 7%, taking its market capitalization to more than $800 billion for the first time ever.

Micron Technology Inc gained 0.2% after the chipmaker forecast second-quarter revenue above estimates, as a global shift to remote work and a recent uptick in 5G smartphone adoption drove demand for its chips.

U.S.-listed shares of Baidu Inc gained 13% on plans to form a company to make smart electric vehicles, according to two sources familiar with the matter.

Declining issues outnumbered advancers by a 1-to-1 ratio on the NYSE and by a 1-to-1 ratio on the Nasdaq.

The S&P 500 posted 82 new 52-week highs and no new low, while the Nasdaq recorded 509 new highs and 16 new lows.

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