S&P 500 breaks new record as markets eye recovery

The S&P 500 closed at a record high of 3,872 on Thursday, up 42 points, or 1.1 percent, as markets seized on positive economic data.

The Dow Jones Industrial Average gained 332 points, or 1.1 percent, closing at 31,056, a number within striking distance of its own recent record.

The boost followed an unexpected drop in jobless claims, which fell to 779,000 in the final week of January.

Though the jobless figure remains historically high, and well above the worst week of the Great Recession, it was below what economists had forecast, indicating that the labor market may be headed in the right direction after contracting in December. Official jobs data is due Friday morning.

Traders expect a substantial economic stimulus in the coming weeks from a COVID-19 relief bill. Democrats have begun a process to sidestep congressional Republicans that will allow them to pass the $1.9 trillion measure President Biden proposed ahead of his inauguration.

Biden has said he wants bipartisan support for the bill, and met with a groups of 10 GOP centrists who proposed a $618 billion alternative.

Biden would have to agree to a smaller price tag to win GOP support, and potentially round out votes from centrists in his own party such as Sens. Joe Manchin (D-W.Va.), Jon Tester (D-Mont.) and Sen. Kyrsten Sinema (D-Ariz.).

But he has vowed to forge ahead with a plan quickly, one way or another.

A recent Brookings Institution study found that even the lower GOP plan would give the economy a substantial boost, but that Biden’s approach would return the economy to its pre-pandemic path.

Markets were also recovering from a recent frenzy that saw retail investors organized on social media antagonize short sellers, driving up stocks such as GameStop.

The gambit lost considerable momentum this week as GameStop shares lost more than 80 percent of their value.