Stocks Rise as Economic Recovery Still Looks Strong

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Stocks rose Thursday, in a broad market rally based on expectations of continued strength in the economic recovery.

The S&P 500 rose 0.95%, partially on the back of a resurgent big tech group but also on the strength of many sectors. Th tech-heavy Nasdaq rose 1.2%. The 10-Year Treasury yield rose to 0.71%, as inflation expectations have picked up some of late. Yields rose when prices fall. The yield is up from 0.65% just a few days ago. Large cap value stocks are up about 3.8% since September 24.

"Even without a phase IV package, our credit quality-motivated macro forecast suggests the domestic economy is still well-positioned to avoid deflation,” wrote Steven Ricchiuto, Chief U.S. Economist at Mizuho Securities in a note. "Our macro projections suggest a very long, even if shallow, recovery/expansion will gradually tighten labor market conditions and keep the economy from sliding into deflation."

U.S. Treasury Secretary Steve Mnuchin said the current fiscal stimulus bill is moving along. It is $2.2 trillion, with $1,200 stimulus checks to households, $600 in unemployment benefits for the many that are still jobless and $120 billion in aid to the restaurant industry. Investors are hoping the bill is not too late, as some small businesses and households may be headed for insolvency.

Jobless claims for the past week came in at 837,000 versus estimates of 840,000 and down from 873,000 last week. This points to a fast pace of decrease in claims and, coupled with the strong labor market and economic data, this is another indication the economic and earnings recovery may continue to be V-shaped.

Cyclical sectors rose. Banks were up between 0.5% and 1%. Highly discretionary and debt-laden stocks were up. United Airlines  (UAL) - Get Report rose 1.5%. 

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