UPDATE: S&P 500, Nasdaq clinch record closes on renewed hopes for fiscal aid package
By William Watts and Sunny Oh
Tesla to join S&P 500 all at once on Dec. 21
U.S. stocks ended higher Tuesday, beginning the month on a positive note amid hopes Congress could make progress towards a new coronavirus aid package.
Equities are aiming to build on a historic November rally that was ignited partly by optimism over progress toward a COVID-19 vaccine to quell the pandemic that caused a recession this year.
Stocks finished lower on Monday, but saw a month of historic gains that saw major benchmarks touch all-time highs. For the month:
Analysts tied support, in part, to efforts to revive talks toward a new round of coronavirus aid on Capitol Hill, after a bipartisan group of lawmakers proposed a $900 billion package.
Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell, testifying before a Senate panel, appeared to welcome the effort (https://www.marketwatch.com/story/mnuchin-powell-sound-supportive-on-new-908-billion-coronavirus-relief-package-2020-12-01?mod=mw_latestnews). News reports said Mnuchin and house Speaker Nancy Pelosi, D-Calif., were scheduled to discuss prospects for a package (https://www.reuters.com/article/us-health-coronavirus-usa-pelosi-idUSKBN28B5HB) in a phone call Tuesday afternoon.
"Whether its fiscal stimulus, or Powell coming out to say the foot's going to be one the gas, that's what the market wants to hear. It's not necessarily about the fundamentals," said Joe Saluzzi, co-head of equity trading at Themis Securities, in an interview.
But some of that enthusiasm was dampened after Senate Majority Leader Mitch McConnell, R-Ky., unveiled his own downsized proposal for a fiscal package, which included several provisions that were unlikely to receive Democratic support.
See: Endgame afoot on Capitol Hill as lawmakers mull fiscal stimulus, funding, defense bills (https://www.marketwatch.com/story/endgame-afoot-on-capitol-hill-as-lawmakers-mull-fiscal-stimulus-funding-defense-bills-11606857704?mod=mw_latestnews)
November gains for equities were tied in large part to optimism over progress toward a COVID-19 vaccine, with three candidates showing promise in late-stage trials.
With pharmaceutical manufacturers seeking emergency approval from governments in the U.S. and Europe, prospects for widespread distribution by early next year stoked expectations for a broader global economic recovery.
"December is kicking off in notable fashion as global equity markets are pressing higher after a very impressive month of performance in November," said Yousef Abbasi, global market strategist at StoneX. "At this point, we may see investors move with a calendar-driven approach to rebalancing into pro-cyclicals. "
As a result, investors are looking past a sharp rise in COVID-19 cases in the U.S. and Europe but some analysts contend the rally is likely to be challenged in coming weeks as worries mount over the economic toll from rising cases amid a lack of additional aid spending out of Washington.
The joint appearance by Powell and Mnuchin in Tuesday's hearing comes after the Treasury secretary last month unexpectedly told the Fed he wouldn't extend five lending programs served as a backstop to municipal and corporate debt markets and to purchase loans made to small businesses and nonprofits when they expire on Dec. 31.
Read:Mnuchin, Powell face questions from lawmakers on curtailed coronavirus loan programs (https://www.marketwatch.com/story/mnuchin-powell-to-face-questions-from-lawmakers-on-curtailed-coronavirus-loan-programs-11606832633?mod=mw_latestnews)
On the retail front, Cyber Monday wrapped up with $10.8 billion in sales (https://www.marketwatch.com/story/cyber-monday-rings-up-record-10-8-billion-in-sales-with-amazon-touting-biggest-holiday-shopping-season-so-far-11606838752?mod=mw_latestnews), up 15.1% from last year and setting a record for the biggest online sales day in U.S. history, according to data from Adobe Analytics (ADBE).
In U.S. economic data, the IHS Markit final manufacturing purchasing managers index reading for November was unchanged at 56.7 from its initial reading.
The Institute for Supply Management's November manufacturing index slipped to 57.5% (https://www.marketwatch.com/story/u-s-manufacturers-grow-at-slower-pace-ism-finds-after-coronavirus-surge-11606837230) from an October reading of 59.3%. Economists surveyed by MarketWatch had looked for a decline to 58%. A reading of more than 50% signals an expansion in activity.
However, a drop in the ISM's employment subindex into contraction territory at 48.4% from 52.3% in October offered some worrying signs on the labor-market front.
Separately, October construction spending showed a rise of 1.3%, versus expectations for a 1% rise.
Investors also heard from senior Fed officials. San Francisco Fed President Mary Daly said the recovery would trundle along until the U.S. was past the pandemic.
-William Watts; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
December 01, 2020 16:53 ET (21:53 GMT)
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