Market Snapshot: Dow extends gains, ends up over 300 points, after Biden announces infrastructure deal

The Dow Jones Industrial Average ended sharply higher Thursday, while the S&P 500 and Nasdaq Composite finished in record territory, after President Joe Biden said he had reached a deal with a bipartisan group of lawmakers on an infrastructure plan.

What did major indexes do?
  • The Dow Jones Industrial Average

    ended 322.58 points higher, up 1%, at 34,196.82.
  • The S&P 500

    advanced 24.65 points, or 0.6%, to 4,266.49, eclipsing its previous record close of 4,255.15 set on June 14 as it more than erased the dip that followed last week’s Federal Reserve meeting.
  • The Nasdaq Composite

    advanced 97.98 points, or 0.7%, to 14,369.71, marking its 17th record close of 2021.
What drove the market?

“We have a deal,” Biden told reporters outside the White House after hosting an Oval Office meeting with a bipartisan group of U.S. senators who had put together a framework for an agreement.

The blue-chip Dow pushed to a new session high after Biden’s remarks, while the S&P 500 industrials and materials sectors, seen sensitive to increased infrastructure spending, also added to gains.

“Investors liked what they saw, and stocks moved higher on the news, although the proof will be in the pudding, if the full House and Senate are able to get it across the finish line and the president can sign it into law,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in emailed comments.

Read: Here’s what’s in the infrastructure deal agreed to by Biden and senators

An agreement in principle before lawmakers departed for the July 4 break had been seen as a possibility, “but as long as the package sits in the summer sun, the more it will attract opposition,” said Greg Valliere, chief U.S. policy strategist at AGF Investments, in a note.

“It will take weeks to iron out all of the details, and then the suspense will rise — could this attract 60 votes in the Senate, avoiding a filibuster?” he wrote.

Earlier, data on first-time U.S. unemployment benefit applications disappointed. Initial claims fell 7,000 to 411,000 in the week ended June 19. Economists had looked for a fall to 380,000.

“The labor market remains lumpy and uneven, so the only real takeaway is that removing fiscal and monetary support too early is the biggest risk to the recovery,” said Jamie Cox, managing partner for Harris Financial Group  

“Although this doesn’t solidify any ‘transitory’ argument, it does anchor markets to pay more attention to the labor market for cues on the future path of rates,” Cox said.

Stocks were buoyed earlier this week as Federal Reserve Chairman Jerome Powell emphasized on Tuesday that the central bank still expected to see inflation pressures to prove transitory. Analysts said some steam came out of the market in Wednesday’s session after Federal Reserve Bank of Atlanta President Raphael Bostic said he pulled forward “my projection for our first move to late 2022,” following a similar comment on interest rates last week from St. Louis Reserve President James Bullard.

In other U.S. economic data, May durable-goods orders climbed 2.3% in May though core capital goods orders slipped.

The advanced trade deficit in goods widened to $88.1 billion in May from $85.7 billion the previous month. Core capital goods orders declined 0.1% in May. And a revised estimate of first-quarter gross domestic product left the rate of growth unchanged at an annual rate of 6.4%.

The pace of growth in the U.S. economy in the first quarter remained unrevised at a 6.4% annualized rate after the latest revision, the Commerce Department said Thursday.

Richmond Fed President Thomas Barkin said Thursday that he thinks U.S. inflation pressures will prove temporary but that the central bank needs to watch prices closely.

Which companies were in focus?
  • Rite Aid Corp.

    shares fell 14.5%, after the drugstore chain on Thursday beat fiscal first-quarter profit expectations but came up short on revenue, amid weakness in the pharmacy services business, while also providing a mixed full-year outlook
  • Darden Restaurants Inc.

    on Thursday said it turned a profit for the fiscal fourth quarter as same-restaurant sales, or those at restaurants open 16 months or longer, rose 90.4%, nearing pre-pandemic levels. The company added 30 net new restaurants during the period. Darden shares rose more than 3%.
  • Shares of Accenture PLC

    rose 2.1%, after the management consulting company on Thursday reported fiscal third-quarter profit and revenue that beat expectations. Accenture also raised its full-year outlook, citing demand for digital transformation.
  • FedEx Corp.

    suspended about 1,400 customers of its freight-shipping service earlier this month, The Wall Street Journal reported Thursday, a move that surprised customers and was aimed at easing a congested network taxed by relentless package volume. Service to some customers was resumed this week. Shares advanced 2.1%.
  • Chinese electric-car maker Xpeng Inc. 

    said Thursday it is planning a global offering of 85 million Class A shares, split between an international offering of 80.75 million shares and a Hong Kong offering of 4.25 million shares.
  • BuzzFeed Inc. is close to a deal to go public through a merger with a special-purpose acquisition company, The Wall Street Journal reported late Wednesday, part of a plan to consolidate other players in digital media.
  • Microsoft Corp.

    shares rose 0.5% gained after launching its Windows 11 operating system designed to update the software that long ruled the PC market for an era when the use of apps on smartphones and tablets increasingly dominate people’s interaction with technology.
What did other markets do?
  • The yield on the 10-year Treasury note

    was unchanged Thursday at 1.486%.
  • The ICE U.S. Dollar Index
    a measure of the currency against a basket of six major rivals, also saw little movement.
  • Oil futures ended the day higher, with the U.S. crude benchmark

    up 22 cents, or 0.3%, to settle at $73.30 a barrel on the New York Mercantile Exchange. Gold futures

    tipped lower, ending the day down 0.4% at $1,776.70 an ounce,
  • In European equities, the pan-Continental Stoxx 600

    rose 0.9%, while London’s FTSE 100

    finished with a gain of 0.5%.
  • In Asia, the Shanghai Composite

    and Japan’s Nikkei 225

    both ended fractionally higher, while the Hang Seng Index

    rose 0.2% in Hong Kong.

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