U.S. stocks rose to record levels Thursday as lawmakers closed in on a deal to extend a new financial lifeline to businesses and individuals that could support the economy through the coronavirus pandemic’s deadliest phase.
All three major stock benchmarks hit intraday highs in early trading. The Dow Jones Industrial Average recently added 103 points, or 0.3%, to 30257, while the S&P 500 also climbed 0.3%. The Nasdaq Composite gained 0.3%.
Congressional leaders on Wednesday closed in on a roughly $900 billion coronavirus relief deal that includes another round of direct payments to households. After months of gridlock, the emerging agreement represented a breakthrough at a critical time in the pandemic, with vaccine distribution under way but hospitalizations hitting record highs.
Investors broadly think a new dose of stimulus is necessary to gird the economy until the end of winter and widespread vaccinations have the potential to bring the virus under control in 2021. Rising cases appear to have hit consumer sentiment, weighing on retail sales, and there are new business restrictions in some states.
“The stimulus is key,” said Mary Nicola, a portfolio manager at PineBridge Investments.
Labor-market data on Thursday added to evidence that the economy has hit a speed bump. Initial claims for unemployment benefits rose by 23,000 to 885,000 in the week ended Dec. 12, whereas economists were expecting a small decline.
“Any stimulus is good stimulus at this point, especially when you’re coming through a rough patch,” Ms. Nicola added. “This will provide a bit more of a boost to the recovery.”
Shares in Lennar rose 5.8% after the home builder said first-quarter home deliveries and orders would be stronger than analysts expect.
International markets also advanced Thursday. The regionwide Stoxx Europe 600 gained 0.3%, led by shares in economically sensitive commodity producers and retailers alongside media companies. China’s Shanghai Composite Index ended 1.1% higher. Japan’s Nikkei 225 ticked up 0.2%.
In bonds, the yield on 10-year Treasury notes edged up to 0.927% from 0.920% Wednesday. The dollar extended its recent slide. The WSJ Dollar Index fell 0.4%, after dropping to its lowest level since April 2018 on Wednesday.
That decline came after the Federal Reserve said $120 billion a month in asset purchases will continue until substantial progress has been made toward its employment and inflation goals. The updated guidance underscores that the central bank will remain supportive of financial markets for some time to come, said Ms. Nicola of PineBridge.
The stimulus package under discussion in Washington was expected to include, along with direct checks, $300 a week in enhanced unemployment insurance and funding for vaccine distribution. Congressional aides noted that the negotiations were continuing and no final agreement had been reached.
Time is tight. Lawmakers expect to attach the aid bill to a full-year spending bill needed to keep the government running after its current funding expires at 12:01 a.m. Saturday.
“We are obviously getting very close to the time period when it gets quite tricky to get a deal over the line,” said Edward Park, chief investment officer at Brooks Macdonald. “Providing some stimulus here is definitely an incremental positive.”
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–Michael Wursthorn contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
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