Wall Street edges higher on recovery outlook

Trading volumes were subdued and are expected to be low in the final two days of the year, which has been a roller-coaster ride for equities
Last Updated 30 December 2020, 21:31 IST

US stocks rose on Wednesday to hover just below record levels as investors bet on a strong economic recovery in 2021 on the back of Covid-19 vaccine rollouts and hopes for even more fiscal support.

Near-term expectations of bigger stimulus checks dimmed after Senate Majority Leader Mitch McConnell blocked a quick vote to back President Donald Trump's call to increase Covid-19 relief checks. McConnell then introduced a bill that tied increased $2,000 stimulus checks with the removal of protections for social media companies and a study on election security.

"It will be hard to get something passed with a lame-duck Congress, let the calendar rollover, and see what happens there. It seems like McConnell is just trying to play kick the can until we get a new Congress in place and see what happens," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

Optimism over vaccine rollouts was boosted after Britain approved the emergency use of AstraZeneca and Oxford University's Covid-19 vaccine, which will start being administered on Monday.

That was tempered somewhat by the first known US case of a highly infectious coronavirus variant discovered in Britain that was now detected in Colorado.

"At some point, we are going to start to have volatility again that is related to Covid, this is not a story that is going away in the first six months of 2021," said Kinahan.

The Dow Jones Industrial Average rose 67.62 points, or 0.22%, to 30,403.29, the S&P 500 gained 4.61 points, or 0.12%, to 3,731.65 and the Nasdaq Composite added 25.96 points, or 0.2%, to 12,876.18.

The last few weeks of the year have seen a shift towards undervalued stocks that are primed to benefit from an economic recovery next year, with sectors such as banking, energy and materials outpacing their peers.

Heavyweight technology shares, the most sought-after this year, were sold off in the rush towards cyclicals.

Trading volumes were subdued and are expected to be low in the final two days of the year, which has been a roller-coaster ride for equities.

The S&P 500 index is up nearly 16% on the year, after trillions of dollar in fiscal and monetary stimulus and progress in developing vaccines helped the benchmark index bounce back more than 65% from its March 23 closing low.

The tech-heavy Nasdaq, which was the first among Wall Street's main indexes to turn positive for the year, is also set for its best yearly performance since 2009, with the majority of gains led by FAANG stocks - Apple Inc, Facebook Inc, Inc, Netflix Inc and Alphabet Inc.

Despite the modest gains, nearly all of the 11 major S&P sectors were higher, with only consumer staples and communication services in negative territory.

Shares of payments network processor Mastercard Inc rose 2.6% after Stephens hiked its price target on the stock on hopes of improving cross-border sentiment.

U.S. travel-related stocks rose as stimulus aid and the starting of mass inoculations sparked hopes of a recovery for the industry that has been among the hardest hit in pandemic-fueled restrictions.

The S&P 1500 airlines index added 1.04%, while cruise operators Norwegian Cruise Line Holdings Ltd, Carnival Corp and Royal Caribbean Cruises Ltd each rose by at least 1%.

(Published 30 December 2020, 21:31 IST)

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