U.S. stocks climbed Tuesday as investors welcomed signs of
progress in negotiations over an economic relief package in Washington.
The S&P 500 rose 47.13 points, or 1.3%, to 3694.62,
snapping a four-session losing streak, the index’s longest stretch of losses
since late September. The Dow Jones Industrial Average gained 337.76 points, or
1.1%, to 30199.31.
And the tech-heavy Nasdaq Composite jumped 155.02 points, or
1.2%, to 12595.06—a new all-time-high that marks the index’s 51st record close
of the year.
Enthusiasm that U.S. lawmakers may be closer to a stimulus
deal helped lift stocks, which have largely swung between small gains and
losses since finishing November with blockbuster gains. The top four
congressional leaders are expected to meet Tuesday afternoon to discuss a
coronavirus relief package and a year-end spending bill.
Democratic and Republican lawmakers have been at an impasse
over a stimulus deal, but on Monday, a bipartisan group of lawmakers urged
Congressional leaders to forge ahead with a $748 billion aid package that would
avoid the thorniest issues holding up a deal.
Investors have been closely monitoring prospects for
additional stimulus, especially as the potential for further Covid-19 lockdowns
in the months ahead has grown. Despite the initial rollout of a Covid-19
vaccine by Pfizer and BioNTech in the U.S. on Monday, the country is still
facing a winter that could be difficult as Covid-19 cases continue to rise.
“The [vaccine] news is here and now the market is just
digesting some of these [November] gains and looking for the next catalyst as
we move into next year,” said Keith Lerner, chief market strategist at Truist
Advisory Services.
In corporate news, shares of Apple climbed after Nikkei Asia
reported that the company plans to produce up to 96 million iPhones in the
first half of next year, a nearly 30% year-over-year jump. Shares of the iPhone
maker rallied $6.10, or 5%, to $127.88.
Energy stocks, banks and materials companies also rallied,
while the Russell 2000 index of small-company stocks jumped 2.4%. The index’s
17% gain for the year is currently outpacing the S&P 500’s 14% rise.
In contrast, shares of several vaccine-makers tumbled.
Pfizer fell 50 cents, or 1.3%, to $38.71, while Moderna slid $7.85, or 5.1%, to
$147.22.
The Food and Drug Administration said Tuesday that Moderna’s
Covid-19 shot is “highly effective,” suggesting it could soon be added to the
arsenal against the pandemic. Shares of the company have experienced a
significant run-up this year. Even with Tuesday’s losses, Moderna remains up
more than 650% year-to-date.
On Monday, the Covid-19 death toll in the U.S. surpassed
300,000, underscoring that despite ongoing advances in coronavirus medical
treatments and vaccines, the pandemic still threatens to continue to be a drag
on the U.S. economy. Officials in Boston and other nearby cities and towns are
tightening Covid-19 restrictions this week, including closing businesses such
as movie theaters for at least a few weeks in an attempt to combat rising
Covid-19 cases.
“The market is having to deal with a lot of headwinds,” said
Hani Redha, a portfolio manager at PineBridge Investments. “Both on the virus
itself, the risk of tighter and tighter lockdowns, and uncertainty around any
kind of additional stimulus in the U.S.”
“It will be a slower recovery without it,” Mr. Redha said,
referring to a new relief package.
Still, many money managers hope that vaccines, coupled with
continuing support from central banks, will allow the rally in stocks and
corporate bonds to extend into 2021. Additional support from the U.S.
government could offer more buoyancy to markets.
“The jury’s still a little bit out on exactly what’s going
to be passed here,“ said Lyn Graham-Taylor, senior rates strategist at
Rabobank. “The U.S. does need some more fiscal stimulus to see it through these
winter months.”
Treasury yields are likely to jump if U.S. lawmakers do pass
a significant stimulus package, lifting growth, inflation prospects and the
supply of bonds, Mr. Graham-Taylor added.
The yield on 10-year U.S. Treasury note rose to 0.921%, from
0.891% on Monday.
U.S. industrial production grew 0.4% in November from a
month earlier, the Federal Reserve said, indicating a continuation of the
recovery in output by factories, mines and utilities. However, output overall
in November remained about 5% below February levels before the pandemic, the
Fed said.
In overseas markets, the regionwide Stoxx Europe 600 index
ticked up about 0.3%. China’s Shanghai Composite Index ended 0.1% lower in a
mixed session for Asian stocks. Japan’s Nikkei 225 slipped 0.2%.
China’s economic recovery continued apace in November, data
from the National Bureau of Statistics showed, putting the world’s
second-largest economy on a stronger footing as it nears the end of the year.
Industrial output rose 7% from a year earlier, faster than economists were
expecting.
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