U.S. stocks end higher, erasing weekly loss for the S&P 500

Health care and technology companies helped drive stocks higher Thursday, bringing the S&P 500 index to a record high and out of the red for the week.

The benchmark index rose 0.5%, and is on track for its third straight weekly gain. Bond yields initially rose, then mostly fell after a much-anticipated report showing a big jump in inflation last month.

The S&P 500 gained 19.63 points to 4,239.18, just beating the index’s previous all-time high set on May 7th. The Dow Jones Industrial Average edged up 19.10 points, or 0.1%, to 34,466.24. The Nasdaq Composite rose 108.58 points, or 0.8%, to 14,020.33.

Smaller company stocks lagged the broader market. The Russell 2000 index fell 15.72 points, or 0.7%, to 2,311.41.

Bond yields initially rose after the inflation data, then fell broadly by late afternoon. The yield on the 10-year Treasury note slipped to 1.45% from 1.49% late Wednesday.

Organon jumped 6.6% for the biggest gain in the S&P 500 and Pfizer rose 2.2% as health care stocks led the market higher. Technology and communication stocks also rose. Microsoft gained 1.4% and Activision Blizzard added 1.2%. Banks, industrial and materials companies were among the decliners. JPMorgan slid 1.6%, while Caterpillar dropped 3.8%. Vulcan Materials fell 3.1%.

U.S. budget deficit for current year hits record $2.1 trillion

WASHINGTON — The U.S. budget deficit hit a record $2.06 trillion through the first eight months of this budget year as coronavirus relief programs drove spending to all-time highs.

The shortfall this year is 9.7% higher than the $1.88 trillion deficit run up over the same period a year ago, the Treasury Department said Thursday in its monthly budget report.

The report showed that spending from October through May totaled a record $4.67 trillion, up 19.7% from the same period a year ago. Government tax revenue was up 29.1% to $2.61 trillion, compared to the same period a year ago.

However, this year’s figure was bolstered by tax payments made in May, a month later than the normal April deadline but a month earlier than last year’s June deadline.The deficit for the budget year that ended Sept. 30 totaled a record $3.1 trillion. Biden, who released his first budget earlier this month, is projecting that this year’s deficit will total $3.67 trillion and will remain above $1 trillion every year over the next decade, reflecting his ambitious plans to boost spending on infrastructure and American families.

The annual federal deficit first topped $1 trillion in 2009 and remained above that level for four years as a deep recession triggered by the 2008 financial crisis depressed tax revenues and led to increased government spending to fight the downturn.

The deficit in May totaled $132 billion, compared to a deficit in May 2020 of $398.8 billion that heavy spending on the initial pandemic relief programs and the delay of the tax deadline.

U.S. unemployment claims fall to 376,000

WASHINGTON — The number of Americans applying for unemployment benefits fell for the sixth straight week as the U.S. economy, held back for months by the coronavirus pandemic, reopens rapidly.

Jobless claims fell by 9,000 to 376,000 from 385,000 the week before, the Labor Department reported Thursday. The number of people signing up for benefits exceeded 900,000 in early January and has fallen more or less steadily ever since. Still, claims are high by historic standards. Before the pandemic brought economic activity to a near-standstill in March 2020, weekly applications were regularly coming in below 220,000.

Nearly 3.5 million people were receiving traditional state unemployment benefits the week of May 29, down by 258,000 from 3.8 million the week before.Businesses are reopening rapidly as the rollout of vaccines allows Americans to feel more comfortable returning to restaurants, bars and shops. The Labor Department reported Tuesday that job openings hit a record 9.3 million in April. Layoffs dropped to 1.4 million, lowest in records dating back to 2000; 4 million quit their jobs in April, another record and a sign that they are confident enough in their prospects to try something new.

“As life normalizes and the service sector continues to gain momentum, we expect initial jobless claims to continue to trend lower,″ said Joshua Shapiro, chief U.S. economist at the economic and financial consulting firm Maria Fiorini Ramirez, Inc.

In May, the U.S. economy generated 559,000 million new jobs, and the unemployment rate dropped to 5.8% from 6.1% in April. Many economists expected to see even faster job growth. The United States is still short 7.6 million jobs from where it stood in February 2020.

30-year mortgage loan at 2.96%

Mortgage rates remained near historic lows this week. The benchmark 30-year home loan held below the 3% mark amid signs of the economy’s recovery from the pandemic recession.

Mortgage buyer Freddie Mac said Thursday the average for the 30-year rate loan dipped to 2.96% from 2.99% last week.

The rate for a 15-year loan, which is a popular option among homeowners refinancing their mortgages, edged down to 2.23% from 2.27% last week.“Despite the stronger economy, the housing market is experiencing a slowdown in purchase application activity due to modestly higher mortgage rates,” said Sam Khater, Freddie Mac’s chief economist. “However, it has yet to translate into a weaker home price trajectory because the shortage of inventory continues to cause pricing to remain elevated.”

Another report Thursday found that Americans moved to slightly bigger homes in less expensive areas. On average, people who moved to a different city in 2020 ended up in a ZIP code where average home values were nearly $27,000 lower than in their previous ZIP code, according to Zillow.

The Associated Press

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