Midday Market Update: Sentiment Challenged on Fiscal Stimulus

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Stocks were largely challenged by midday Thursday, with indices pulled higher by a move into growth tech stocks. Congress faltering on stimulus talks is watering down strong economic expectations supported by the jobless claims reading. 

The S&P 500 was essentially flat by midday, but not because cyclical stocks were holding in. The tech-heavy Nasdaq rose about 0.8%, as investors, uncertainty in a V-shaped economic recovery, continue to pile into growth tech stocks. The 10-Year Treasury yield fell to 0.67%, even as price pressure from the bonds issued by the Treasury Department comes into the fray. Yields fall when prices rise. 

Painting a positive picture of the recent speed of the economic recovery from the pandemic, jobless claims for the past week came in at 963,000, beating estimates of about 1 million and improving over last week’s reading of 1.19 million. For almost two months, weekly claims were above 1 million as the economic recovery had begun to stall. This reading show the recovery has picked up again. 

Economically sensitive stocks like consumer discretionary, industrials and materials were flat to down a few tenths of a percentage point. Large cap oil and banking stocks were down more than 1%. 

Fiscal stimulus talks are breaking down, spoiling any positive indicator on the future brought on by the jobless data. The roughly $1 trillion bill has not yet passed, while states have paused reopenings and businesses are suffering. Job creation and the speedy economic rebound into 2021 hinges somewhat on this stimulus. 

Elsewhere, Lyft  (LYFT) - Get Report shares fell 5% to $29, after the company met revenue estimates and posted a narrower net loss than expected, as the company cut costs effectively. Management said profitability remains on track, even conservatively assuming fewer rides. Investors need more certainty on the top-line recovery. But Lyft, like Uber  (UBER) - Get Report, may have to halt operations in California. 

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