NEW YORK CITY, RAW – The S&P 500 and Nasdaq have closed at record highs, propelled by optimism about more pandemic relief under the Biden administration to support the economy after data showed a tepid labour market recovery.

The number of Americans filing new applications for unemployment benefits dipped to 900,000 last week but still remained stubbornly high as the COVID-19 pandemic tears through the nation, raising the risk that the economy will shed jobs for a second straight month in January.

But other data showed the housing and manufacturing sectors as areas of strength to help buttress the economy.

“We’ve had a very strong momentum going into this year and coming into the Biden administration… because of prospects of a bigger stimulus cheque and more spending in general,” said Mohannad Aama, managing director at Beam Capital Management LLC in New York.

Unofficially on Thursday, the Dow Jones Industrial Average fell 12.37 points, or 0.04 per cent, to 31,176.01, the S&P 500 gained 1.23 points, or 0.03 per cent, to 3,853.08 and the Nasdaq Composite added 73.67 points, or 0.55 per cent, to 13,530.92.

The Nasdaq Composite advanced, boosted by a jump in shares of megacap stocks such as Alphabet Inc, Apple Inc and Inc before their earnings reports in the coming weeks.

It follows Netflix Inc’s blowout results on Wednesday that revitalised the “stay-at-home” beneficiaries, adding $US262 billion in overall market capitalisation to the FAANG group of stocks.

In a reversal of the trend earlier this month, the Russell 1000 growth index, which includes technology stocks, is this week far outperforming the Russell 1000 value index, which is heavily comprised of cyclical stocks such as financials and energy.

President Joe Biden has launched several initiatives during his initial days in office, including ramping up testing and vaccine rollouts.

Technology, consumer discretionary and communication services which includes Alphabet and Facebook, were the only S&P sectors in green.

Energy was the biggest drag among 11 major S&P sectors, following news Biden revoked the Keystone XL oil pipeline project’s presidential permit.

With valuations near a 20-year high, corporate results could present an important test of whether the stock market rally has run ahead of fundamentals.

Earnings at S&P 500 companies are expected to rise by 24 per cent in 2021 after falling 15 per cent in 2020, according to Refinitiv data as of January 15.

United Airlines Holdings Inc dropped after posting a fourth straight quarterly loss due to the COVID-19 pandemic but said it aims to cut about $US2 billion of annual costs through 2023.

Ford Motor Co jumped extending gains for a second straight day after Deutsche Bank raised its price target on the US auto maker’s stock.