U.S. stocks rose Wednesday, suggesting that the major indices are able to recoup the lukewarm losses of the past few days and continue their recent rally.
The S&P 500 rose by 0.3%, while the Nasdaq Composite Index added 0.4% and the Dow Jones Industrial Average rose by 98 points or 0.3%. Stock market indices fell slightly Tuesday after Senate Majority Leader Mitch McConnell held a vote on whether to send more stimulus controls to many Americans.
Equities have risen the most this month, although the momentum that drove markets in November has been lost as investors weigh mixed signals on the economic outlook. Nevertheless, the S&P 500 ended Tuesday at its second highest closing in history.
Investors bet that the corruption of Covid 19 will encourage state and local governments to end social and commercial restrictions.
Karen Focht/Zuma Press
The use of coronavirus vaccines and the approval of a new $900 billion fiscal stimulus package helped boost market sentiment in the last weeks of the year. But high infection rates on Covida 19, the emergence of a rapidly spreading variant of the virus, economic data showing that the recovery is slowing, and going back and forth in Washington on the scale of the stimulus package temper this optimism somewhat.
We’re going to see a back and forth for a while, the vaccine against the virus and politics against the economy, said Altaf Kassam, Head of Investment Strategy at State Street Global Advisors in Europe. November was a great month for the markets and there were always people breathing. December seems to be the right month.
In addition, trading is generally weaker in the last week of December as investors take time off during the year-end holidays. Low liquidity can amplify market movements or lead to volatile trading sessions.
On Tuesday Colorado reported the first case in the United States of a rapidly spreading variant of Covid-19. This case was first discovered in the United Kingdom and led to widespread closure and travel restrictions in that country. The U.S. Centers for Disease Control and Prevention said they expect new cases in the coming days, emphasizing that it is normal for viruses to change by mutation.
The United Kingdom withdrew on Wednesday the use of a vaccine against the coronavirus of
and Oxford University. The vaccine is the third Western vaccine to be approved this month for emergencies, as the number of cases is increasing in the United States and Europe.
The number of new cases of the coronavirus reported in the United States exceeded 247,000 on Tuesday, the second highest daily total since the start of the pandemic, while hospitalizations due to covid-19 reached another peak.
AstraZeneca’s vaccine in particular has more appeal than any other vaccine in the world, says Hani Redha, multi-asset portfolio manager at PineBridge Investments. The sheer number of doses and the fact that they are easier to disperse, especially in developing countries, make this an important element, he added.
Investors are looking far beyond the short-term problems of the pandemic and are betting that vaccines will enable governments to ease restrictions and boost economic recovery. This could already happen in April, according to Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management.
As long as governments maintain immunity to the most vulnerable, they will see hospitalisation and mortality rates fall, and use that as an opportunity to open up the economy, he said.
The Home Sales data of November are expected at 10:00 am. AND the National Association of Real Estate Agents. While the housing market has been an important pillar of the economy during the summer months, the outlook for housing sales has fallen in October and is expected to fall by 0.3% per month as a result of rising house prices.
The ICE U.S. Dollar Index, which tracks the U.S. dollar against a basket of other currencies, fell 0.3% and approached its lowest level since March 2018.
On the bond markets, the yield on the 10-year US Treasury bond rose from 0.934% on Tuesday to 0.941%.
Abroad, the Stoxx Europe 600 fell by 0.1%.
In Asia, most major indices closed higher. The Hong Kong Hang Seng Index rose by 2.2%, while the Shanghai Composite rose by 1.1%. South Korea’s Kospi also won 1.9%. The Japanese Nikkei 225 fell by 0.5%.
Email Will Horner at [email protected]
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