Major U.S. equity indexes on Monday wrapped up trade at all-time highs as investors drew optimism from President Donald Trump ending a standoff over the weekend and signing a coronavirus aid bill that will soon send direct payments to Americans.
Markets will end the week on Thursday due the New Year’s holiday on Friday.
What are major indexes doing?
- The Dow Jones Industrial Average DJIA, +0.68% closed up 204.10 points, or 0.7%, to conclude at a record at 30,403.97. The blue-chip benchmark briefly climbed to 30,525.56, its first intraday record in 10 days.
- The S&P 500 SPX, +0.87% added 32.30 points, or 0.9%, to 3,735.36, finishing at an all-peak after booking an intraday record high at 3,740.51.
- The Nasdaq Composite COMP, +0.74% climbed 94.69 points, or 0.7%, to 12,899.42, and finished at its own record high after touching an intraday peak at 12,930.89.
Stocks put in a mixed performance in holiday-shortened trading last week, with markets closed Friday for Christmas Day after an early finish on Thursday.
What’s driving the market?
Markets started the final week of 2020 on solid footing in the second day of a so-called Santa Claus rally that was at least partly propelled higher on the completion of a closely followed fiscal spending package that is seen as a key support for a healthy market and the economy in the near term, amid the viral pandemic.
Trump’s decision late Sunday to sign the aid package came as a relief to stock-market investors who had been blindsided by his demands late last week that lawmakers raise checks to households to $2,000 from $600. Trump was pressured by lawmakers from both parties, who had negotiated the legislation with the administration. There were still efforts afoot toward a higher direct payment for qualified Americans but it is unclear if that will get traction in the Senate.
“Optimism rests most immediately on passage of the $900 billion fiscal rescue package that Congress recently agreed to and President Trump signed Sunday, wrote Mark Zandi, chief economist at Moody’s Analytics, in a research note.
Read: As stocks hit new highs, ‘one of the most important tailwinds for equities’ is in place
The current fiscal package includes $1.4 trillion to fund government agencies through September and averts a federal government shutdown.
“While the benefits of the relief bill won’t be reflected in December data that we will see next week, the direction of least resistance remains higher,” said James Meyer, chief investment officer at Tower Bridge Advisors, in a note.
Travel-related stocks were among Monday’s big winners, with the U.S. Global Jets ETF JETS, +0.77%, an exchange-traded fund, including some of the biggest airlines, gaining 0.8%. Airlines are among the companies that have been the most beaten down during the viral outbreak and are seen as due for a rebound as the economy improves and vaccines are deployed.
“After a tough start the economy should have a much better 2021; the bar couldn’t be any lower,” Zandi wrote. “On the other side of the pandemic, in summer 2021, the economy’s prospects should improve markedly,” the economist wrote.
However, some of the popular winners of the pandemic era, notably large-capitalization tech-oriented stocks, also led gainers on Monday, with the S&P 500’s tech sector closing up 1.2% and communication services rising 1.9%.
Meyer said much of the week’s trading should remain quiet with investors seeing clear resolution on a months long saga over a fiscal relief bill.
See: Stock-market pros are having a tough time imagining an S&P 500 slump in 2021
Markets will be shut Friday for the New Year’s Day holiday.
Bulls expect stocks to get a modest seasonal lift from a “Santa Claus rally,” referring to a phenomenon that runs the last week of December and the first two trading days of January.
Read: ‘Santa Claus’ rally has begun. Why few 7-session stretches are better for the stock market
Market participants will also closely eye the trajectory of COVID-19 after health care experts warned that a postholiday bump in infections was likely after Americans traveled across the country for Christmas. The U.S. tally of coronavirus cases topped 19 million.
Which stocks are in focus?
- Alibaba Group Holding Ltd. BABA, +0.16% boosted its stock repurchase program late Sunday from $6 billion to $10 billion, and U.S. listed shares closed 0.2%, despite an antitrust investigation by Chinese regulators that saw Alibaba’s stock finish down 13% on Thursday.
- Shares of Myovant Sciences MYOV, +20.48% soared over 20% Monday, after its parent Sumitovant Biopharma said Myovant will work with Pfizer Inc. PFE, -1.21% to jointly develop a treatment for men’s and women’s cancer in a deal worth up to $4.2 billion. Shares of Pfizer finished down 1.2%.
- Novavax Inc. NVAX, -9.66% said Monday it is starting a late-stage trial of its COVID-19 vaccine candidate,with plans to enroll up to 30,000 volunteers at about 115 sites in the U.S. and Mexico. Its shares closed nearly 10% lower on the session.
- Shares of AeroCentury Corp. ACY, +414.85%, a company that leases aircraft and engines to regional air carriers, rose more than 1,300% on Monday, and closed up more than 400%, after the company said the New York Stock Exchange had accepted its plan to remain a listed company.
How are other markets are faring?
- The 10-year Treasury note yield TMUBMUSD10Y, 0.921% was nearly flat at 0.932%, after hitting an intraday high of 0.963%. Bond prices move in the opposite direction of yields.
- The Stoxx Europe 600 index SXXP, +0.66% closed 0.7% higher, while U.K. markets remained closed for the holidays. Japan’s Nikkei NIK, +0.74% finished 0.7% higher, the Shanghai Composite SHCOMP, +0.02% ended flat and Hong Kong’s Hang Seng Index HSI, -0.27% fell 0.3%.
- The ICE U.S. Dollar Index DXY, -0.03%, a gauge of the dollar’s strength against its major rivals, was little changed to slightly higher.
- February gold futures GCG21, -0.34% settled down 0.1% to end at $1,880.40 an ounce. U.S. benchmark crude futures CL.1, -1.08% closed down 1.3% to $47.62 a barrel.
William Watts contributed to this report.
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