Market Snapshot: Dow, S&P 500 carve out records in final session of year, with Nasdaq scoring best annual gain since 2009

The tech-heavy Nasdaq showed the most impressive performance, trading up 0.7% this week, 5.7% in December, 15.7% this quarter, and 43.6% this year. The Nasdaq’s gain in 2020 represented its best annual performance since 2009.

What’s driving the market?

Equities ended 2020 on a high note after plunging into a bear market in February and March as the COVID-19 pandemic threw the global economy into a deep recession.

The bear market was one of the shortest in history though, with equities subsequently rebounding as governments and central banks moved to aggressively provide fiscal and monetary stimulus.

“Expectations for improving news on the vaccine and economic fronts as 2020 wore on were rewarded if one used pullbacks in the stock market to take action and put money to work in sectors that would likely benefit from a positive viewpoint looking out into and through next year,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, in a note.

“It also doesn’t hurt that the Federal Reserve has been frequently reminding us that its low-interest-rate policy is likely to be in place through at least the end of 2021 if not meaningfully longer,” he said.

Gains in stocks accelerated over the last two months as vaccines were approved and began to be rolled out, even as a resurgence of the virus sends the number of cases and fatalities to new highs.

But investors also caution that the pace of recent stock market gains, the resurgent pandemic, and a slow start to the vaccine rollouts could set the stage for a near-term pullback early next year.

U.S. data showed first-time jobless benefit claims unexpectedly declined by 19,000 to 787,000 last week. Economists surveyed by MarketWatch had forecast initial claims to rise to 835,000. State continuing jobless claims dropped 103,000 to 5.22 million.

While initial jobless claims fell for a second week, they remain high compared with any week before the coronavirus pandemic. The prior record of 665,000 set in 2009, was easily shattered early in the pandemic when new claims peaked at a whopping 6.87 million in the last week of March this year.

“The last meaningful gauge of the state of the jobs market for 2020 tells a familiar story: one of an economy that has slowed considerably in recent months as the renewed threat posed by the resurgence in COVID-19 across the country is taking a toll,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors.

Stock market trading activity was light Thursday ahead of the New Year’s Day holiday Friday when markets will be closed.

Investors appeared to take fading prospects for larger direct payments to U.S. households from the federal government in stride.

The logjam in the U.S. Senate over bigger stimulus checks for Americans showed no signs of breaking Thursday, likely dooming the proposal until after President-elect Joe Biden takes office in late January. Senate Majority Leader Mitch McConnell dug in against a House bill to boost the checks from $600 to $2,000 per family member and expand who can qualify for them, calling it “socialism for rich people.”

The U.S. counted at least 229,235 new cases on Wednesday, and at least 3,808 people died, according to a New York Times tracker. In the past week, the U.S. has averaged 183,271 cases a day, down 13% from the average two weeks ago, but health experts have warned that cases are likely to rise following travel around Christmas.

There are currently a record 125,220 COVID-19 patients in U.S. hospitals, according to the COVID Tracking Project, breaking the record set a day ago. 

Which companies are in focus?

• Hedge fund Alden Global said it’s made a $14.25-per-share nonbinding proposal for the shares it doesn’t already own in Tribune Publishing Co. TPCO, +7.11%, the publisher of the Chicago Tribune and New York Daily News. Tribune shares jumped 7.1%.
• Shares of Exxon Mobil Corp. XOM, -0.91% fell 0.9% after the energy giant said it expects higher oil and gas and chemical prices to boost fourth-quarter earnings, but confirmed that it is also expecting to write down $18 to $20 billion of upstream assets. Exxon shares have declined more than 40% in 2020.

What are other markets doing?

• Hong Kong’s Hang Seng Index HSI, +0.31% rose 0.3%, while the Shanghai Composite SHCOMP, +1.72% jumped 1.7%.
• The pan-European Stoxx 600 SXXP, -0.30% fell 0.3%, leaving it up 4.1% this year. London’s FTSE 100 UKX, -1.45% declined 1.5%, extending a 14.3% yearly drop, its largest such fall since 2008.
• The 10-year U.S. Treasury note yield TMUBMUSD10Y, 0.919% was 1.3 basis point lower at 0.913%, adding to a yearly decline of around 1 percentage point, its largest such drop since 2011. Yields and debt prices move in opposite directions.
• The ICE U.S. Dollar Index DXY, +0.26%, a measure of the U.S. currency against a basket of six major rivals, was up 0.3%, after trading near a 2 1/2-year low.
• Oil futures were higher, with the U.S. benchmark CL.1, +0.02% up 0.3% to settle at $48.52 a barrel, but booking a 20.5% loss in 2020.February gold futures GC00, +0.43% edged higher by $1.70, or less than 0.1%, to settle at $1,895.10 an ounce. For the year, gold values were up nearly 25%.