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U.S. Stocks Edge Higher to Start New Quarter


U.S. stocks continued their march higher Thursday, following the S&P 500’s best six-month performance since 2009, as central banks’ stimulus measures keep markets buoyant.

After paring early gains, the S&P 500 was up 0.3%. Despite a decline in September, the benchmark is up more than 35% over the past six months. The Dow Jones Industrial Average rose 0.2%. The Nasdaq Composite increased 0.8%.

Appetite for risky assets that typically generate higher returns—including stocks—continue to be buoyed by the flood of cheap money unleashed by central banks and governments.

“If you look at the market, it’s telling you that we’re going to get a recovery next year. I’m convinced we’re in a new bull market,” said Patrick Spencer, managing director at U.S. investment firm Baird. “Even with the election, behind all that is central banks and liquidity.”

Shares of

Boeing

rose 4% after the plane maker got a tentative personal endorsement for fixes to its beleaguered 737 MAX from the head of the Federal Aviation Administration. Shares in

PepsiCo

fell slightly even after the drinks and snacks company beat earnings estimates.

Coronavirus infections are another point of focus. Infection rates in the U.S. have remained elevated for some months, and health experts have warned that the colder months may bring a new wave of cases. Although investors don’t expect to see a repeat of the spring’s stringent lockdowns, fresh restrictions could threaten recovery in the labor market and weigh on consumer spending, which accounts for more than two-thirds of the U.S. economy.

About 837,000 Americans applied for new unemployment benefits through the week ended Sept. 26, down from 873,000 the week before, signaling an improving labor market though unemployment remains high. New figures from the Department of Commerce showed that U.S. consumers boosted spending by 1% in August from the month prior.

U.S. consumer spending rose 1% in August while incomes fell, in part in part because of a decline in government aid for unemployed workers.

Investors continue to assess whether Congress will pass another aid package that would bolster U.S. economic growth ahead of the elections, though such hopes have largely receded in recent weeks.

The Nasdaq Composite hit a string of records in the third quarter as investors poured money into technology companies.



Photo:

Victor J. Blue/Bloomberg News

A renewed burst of optimism this week—prompted by talks between Republican and Democratic leaders—began to fade Wednesday after the House postponed a vote on a $2.2 trillion package. Democrats are trying to find common ground with the White House on a bipartisan agreement, though they remain far apart on key issues.

“The big wild card in the U.S. is whether we get more fiscal spending or not,” said Gregory Perdon, co-chief investment officer at private bank

Arbuthnot Latham.

“The political backdrop is just so toxic.”

In bond markets, the yield on the benchmark 10-year Treasury ticked up to 0.718%, from 0.677% Wednesday.

Overseas, the pan-continental Stoxx Europe 600 rose 0.3%. In Asia, the Tokyo Stock Exchange halted all stock trading for Thursday due to a system problem and said it expects to resume normal trading Friday. Markets in China, Hong Kong and South Korea were closed for a holiday.

Economists have long used letters of the alphabet like V and U to describe economic recoveries. But the coronavirus downturn is so different from past recessions that economists are coming up with new shapes to describe the potential recovery. WSJ explains. Illustration: Jacob Reynolds

Corrections & Amplifications
The yield on 10-year Treasurys ended Wednesday at 0.677%. An earlier version of this article incorrectly said the yield was 0.677% on Tuesday. (Corrected on Oct. 1)

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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