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Investors are also poised to receive more help against coronaviruses after Senate Majority Leader Mitch McConnell on Thursday said he aimed to pass a stimulus package before the end of the year, contrasting with pre-election comments that a deal is expected to wait until 2021.
“A package completed by the end of the year would exceed investor expectations and significantly reduce short-term economic risks,” UBS analysts said in a report on Friday.
While that package will likely be much smaller than the Democrats touted $ 2 trillion plan, markets are reassured that the U.S. economy has been expanding for several months.
“Unemployment is down, job vacancies have rebounded, home sales are strong and corporate profits have clearly turned the corner,” Nicholas Colas, co-founder of DataTrek Research said in a note.
The big caveat: While activity has picked up in major economies following historic contractions in the second quarter, the recovery is slowing and the outlook is still threatened.
The pandemic is expected to cause lasting damage to the labor market, even as several European governments extend wage support programs to next year. “There are risks that jobs and incomes will be lower than they were before Covid for a while,” the Bank of England said in a statement on Thursday, announcing more stimulus measures.
In the United States, where the number of coronavirus cases is increasing at an alarming rate, the recovery is also faltering. Some 638,000 jobs were created in October, but the country is still down 10 million since the start of the pandemic.
While the public may be less supportive of blind lockdown policies in the United States, the rise in infections will at least maintain business and consumer confidence, weighing on the economy.
US fourth-quarter GDP is closer to returning to negative territory “than it is comfortable,” said Colas of DataTrek Research. “Markets are okay with this for now, but further weakness could change their tone.”
Disney takes stock of a trying year
Disney released its fourth quarter and full year results Thursday, ending one of the worst fiscal years in its nearly 100-year history, reports my CNN Business colleague Frank Pallotta.
What’s Happening: Disney’s media empire has been hampered by the coronavirus pandemic. Its parks and resorts have been closed for months, its productions have been halted, and hit movies like Marvel’s “Black Widow” have been postponed until next year.
The company’s third quarter was brutal, ending with a net loss of nearly $ 5 billion. Disneyland remains closed in California and the company has temporarily closed its park in Paris to comply with lockdown measures.
Disney is laying off 28,000 U.S. employees in its parks unit and has revealed plans to revamp its entertainment division around streaming, primarily the Disney + service, which has been a huge bright spot this year.
Disney shares have fallen about 12% so far this year.
Stock Snapshot: Investors and media watchers will want to know how bad the damage has been for Disney this year. They’ll also be keeping tabs on the numbers for its “Mulan” Disney + release and details on how the media giant plans to bounce back next year.
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Wednesday: Singles Day in China; OPEC Monthly Report
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