On Thursday, December 10th, major averages on the U.S. stock market closed higher from early lows. This is due to increasing confidence from investors as fiscal stimulus talks look promising and are expected to support the overall economy. It appears as though this positive news has outweighed the adverse effects from the jump in jobless claims shown from labor market data. Weekly jobless claims jumped to 853,000, significantly higher than the expected 725,000, which is the highest level since the middle of September.
According to Keith Buchanan, senior portfolio manager at Globalt Investments, “The competing narrative of the virus is here, it is worse, the natural pullback of the economy because of that and the lack of uncertainty around the timeline and magnitude of the package is going to be a daily struggle with pretty volatile moments in the interim. If this is the start of a trend, we will test the capacity of the market to remain optimistic by looking past a really tough environment that is on the ground right now.” That being said, and as the labor market recovery is weakening, the passing of a stimulus package will go along ways to keep the economy and the markets afloat.
Another focal point investors were watching closely was the meeting of the U.S. Food and Drug Administration advisors to determine whether or not to approve Pfizer and BioNTech’s submission for emergency use of their vaccine. The following weekend, the FDA gave the clear for the vaccine to be issued in the United States, the first Covid-19 vaccine that has been approved in the states. Despite being short of a full approval, this authorization will also boost investors’ confidence in the economic recovery and will likely provide another support for the markets.
According to Dr. Stephen Hahn, FDA Commissioner, “The FDA’s authorization for emergency use of the first COVID-19 vaccine is a significant milestone in battling this devastating pandemic that has affected so many families in the United States and around the world.” The vaccine will be the start of getting the country back to pre-pandemic conditions. Jobless claims will likely begin to decrease as more companies will allow workers to return to work and less people will be infected with the virus.
The passing of a new stimulus package and the introduction of a vaccine to the virus will prove to raise investors’ confidence towards both the markets and economic recovery as a whole.