Dow, S&P 500 close at record highs after stimulus package

On Thursday, the Dow Jones Industrial Average and the S&P 500 closed at an all-time high after US President Joe Biden signed a $1.9 trillion fiscal stimulus package. At the close of Wall Street, the Dow Jones added 0.58%, to end at 32,485.59 units, and the S&P 500, 1.04%, at 3,939.34 points. The Nasdaq Composite advanced 2.52%, to 13,398.67 units, thanks to a rebound in technology companies shares such as Tesla, Apple, Amazon, Alphabet, Facebook, and Netflix. 

In the last five days, the benchmark accumulated a rise of 3.6%. Biden’s aid plan will provide $400 billion for direct payments of $1.400 to most Americans. Besides, $350 billion will aid state and local governments. The program will also expand the child tax credit and provide increased funding for distributing vaccines against COVID-19. The Democratic-led House of Representatives gave final congressional approval to the stimulus measure on Wednesday, giving the president a significant victory in the first months of his term. 

Calm in the Treasury bond yields lifts riskier assets

On the economic side, figures from the Labor Department showed that initial applications for unemployment benefits in the United States totaled 712,000 during the past week, below the 725,000 predicted by analysts. The data represented a decrease of 42,000 applications compared to the previous week. It is a sign that the job market improves as coronavirus infections decrease.

The relative tranquillity in the Treasury bond market also boosted sentiment for risk assets. The benchmark 10-year yield stood at 1.52% this Thursday after shooting to a one-year high of 1.6% last week. Some investors fear that the size of the financial aid plan will accelerate inflation above the Federal Reserve’s 2% target. It may lead to an earlier-than-expected interest rate hike. Europe and Asia European markets posted gains after the European Central Bank said Thursday to stimulate bond purchases next quarter and kept its monetary policy unchanged. 

The Stoxx 600 was up 0.49%; London’s FTSE 100 increased by 0.17%; the DAX of Frankfurt gained 0.20%; the CAC 40 of Paris expanded by 0.72%, and the IBEX 35 of Madrid advanced 0.80%. 

In Asia, China’s Shanghai Composite raised by 1.9%, helped by local credit data. Japan’s Nikkei 225 gained 0.5%, and Hong Kong’s Hang Seng hiked 1.6%. 

Oil prices rose for the second day in a row, given the dollar’s weakness in international markets.