Stock Market Today: With Eyes Only for Stimulus, Investors Keep Buying
Wall Street kept its sights squarely on the high likelihood of a stimulus bill Thursday, ignoring discouraging jobs and small business data.
Stocks continued their broad but modest gains Thursday as the promise of COVID stimulus aid helped overshadow troubling economic signals.
Senate Majority Leader Mitch McConnell said it was "highly likely" that both stimulus and funding negotiations would continue through the weekend – a nearly $1 trillion deal appears imminent. And it's none too soon: Jobless claims climbed to 885,000 last week, up from 862,000 previously and the highest such figure since early September.
Barclays' Michael Gapen and Chun Yao also highlighted deterioration in small business data provided by local-commerce platform Womply: "We view the decline in the number of small businesses open and drop in net revenue in November as consistent with other high-frequency data that suggest momentum in U.S. economic activity is slowing into year-end."
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The Dow Jones Industrial Average gained 0.5% to a record 30,303, led by Johnson & Johnson (JNJ, +2.6%) and Nike (NKE, +1.6%); the latter reports quarterly earnings Friday morning.
Other action in the stock market today:
- The S&P 500 climbed 0.6% to a new high of 3,722.
- The Nasdaq Composite also closed at record highs, finishing up 0.8% to 12,764.
- The small-cap Russell 2000 jumped 1.3% to a fresh high of 1,978.
- Gold futures closed at $1,890.40 per ounce, a 1.7% improvement.
- U.S. crude oil futures improved by 0.9% to $48.33 per barrel.
The Case for Value
Value stocks might have hiccupped a bit of late, but they're still enjoying a solid quarter. The Russell 1000 Value Index has outperformed the Russell 1000 Growth Index by roughly five percentage points since Oct. 1.
While value has served up several head fakes over the past decade-plus, "We believe it's the very beginning of a change in the environment," says Eli Salzmann, portfolio manager of Neuberger Berman Large Cap Value Fund (NPRTX). "With both monetary and fiscal stimulus being pumped into the system and a post-pandemic environment on the horizon, we think the economic clock is resetting back to early cycle, and that tends to favor value over growth."
If so, that's great news for broader value stocks and value funds alike. But Salzmann adds that "we also believe that inflation and interest rates will be higher in the medium term versus where they are today, and that has tended to benefit value sectors such as Financials, Industrials and Materials."
Industrial stocks had a particularly forgettable spring, and, even after a vigorous comeback in recent months, it greatly trails the broader market with 9% returns in 2020. But not to worry – a number of strategists agree with Salzmann that the sector will have its day in 2021. These five industrial stocks might fly under the radar of many investors, but their outlooks are bright as the new year nears.
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