U.S. stocks closed higher on Wednesday, with the Dow Industrials nudging up to a record, as investors looked towards an improving economic outlook in 2021 on the back of COVID-19 vaccine rollouts and hopes for even more fiscal support. Canada’s TSX closed virtually unchanged - but still slightly in the green thanks to rallying stocks in the resource sectors.
Near-term expectations of bigger stimulus checks dimmed after Senate Majority Leader Mitch McConnell blocked a quick vote to back President Donald Trump’s call to increase COVID-19 relief checks to $2,000 from $600 already signed into law. McConnell introduced a bill that tied the increased $2,000 stimulus checks with the removal of protections for social media companies and a study on election security.
“Something’s better than nothing but there’s a lot of politics involved. The market is anticipating something, whether $600 or $2,000 part of that is baked into the cake,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
“The markets are saying ‘what have you done for me lately?’ and people are going to be focusing on what’s going to happen if we see more and more restrictions due to the pandemic.”
Investors are also eyeing the Georgia run-off election on January 5, which could lead to Democratic control of the Senate, and upend the market view of political gridlock.
Optimism over vaccine rollouts was boosted after Britain approved the emergency use of AstraZeneca and Oxford University’s COVID-19 vaccine, which will start being administered on Monday.
But that was tempered somewhat by the first known U.S. case of a highly infectious coronavirus variant discovered in Britain that was now detected in Colorado.
The Dow Jones Industrial Average rose 73.89 points, or 0.24%, to 30,409.56, the S&P 500 gained 5 points, or 0.13%, to 3,732.04 and the Nasdaq Composite added 19.78 points, or 0.15%, to 12,870.00. The last few weeks of the year have seen a shift towards undervalued stocks that historically are the first to benefit from an economic recovery, with sectors such as banking, energy and materials outpacing their peers.
The S&P/TSX Composite Index closed up 2.38 points, or 0.01%, at 17,545.81. Stocks linked to commodity prices had a strong session overall, with the energy sector rising 1.69% and materials 1.83%.
Among the biggest gainers of the day were a couple stocks that have skyrocketed amid the pandemic this year: meal-kit provider Goodfood Market rose 7.28% and cloud-based learning platform company Docebo gained 6.27%.
Oil prices settled higher on Wednesday, supported by a draw in U.S. crude inventories and Britain’s approval of a second coronavirus vaccine but pressured by swelling year-over-year supply.
Brent crude futures settled up 25 cents to $51.34 a barrel, off the session high of $51.56 and well lower than the $66 price that started the year. U.S. West Texas Intermediate crude settled up 40 cents to trade at $48.40, substantially down from about $62 at the start of 2020.
Both contracts slipped early the session as a bigger fiscal aid package in the United States looked increasingly unlikely, dampening hopes for a swifter recovery of oil demand that has been hammered by the COVID-19 pandemic.
Prices rallied after an Energy Information Administration report showed crude inventories fell by 6.1 million barrels in the latest week to 493.5 million barrels. But traders noted that U.S. crude inventories still were ending the year more than 10% higher than the last week of 2019.
Gold prices edged higher on Wednesday, as the prospect of increased fiscal aid pushed the dollar to its lowest in more than two years, although global COVID-19 vaccine rollouts and increased risk appetite limited bullion’s gains. U.S. gold futures settled up 0.6% at $1,893.40.
On Wall Street, heavyweight technology shares, the most sought-after this year, weakened as investors rushed towards cyclical stocks.
Trading volumes were subdued and are expected to be low as the year draws to close.
The S&P 500 index is up 15.5% on the year, after trillions of dollar in fiscal and monetary stimulus and progress in developing vaccines helped the benchmark index bounce back nearly 67% from its March 23 closing low.
The tech-heavy Nasdaq, which was the first among Wall Street’s main indexes to turn positive for the year, is also set for its best yearly performance since 2009, with majority of gains led by FAANG stocks - Apple Inc, Facebook Inc, Amazon.com Inc, Netflix Inc and Alphabet Inc.
Despite the modest gains, eight of the 11 major S&P sectors were higher, with energy and materials the best performing.
Shares of payments network processor Mastercard Inc rose 2.56% after Stephens hiked its price target on the stock on hopes of improving cross-border sentiment.
Volume on U.S. exchanges was 9.57 billion shares, compared with the 10.93 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 2.32-to-1 ratio; on Nasdaq, a 2.27-to-1 ratio favored advancers.
The S&P 500 posted 22 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 126 new highs and 22 new lows.
Reuters, Globe staff