Wall Street rises on hopes of vaccine-fueled recovery
U.S. stocks rose on Wednesday, led by energy shares, as investors bet on a strong economic recovery in 2021 on the back of COVID-19 vaccine rollouts and hopes of bigger fiscal support.
The last few weeks of the year have seen a shift towards undervalued stocks that are primed to benefit from an economic rebound 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.
Still, 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.
“We’re having a little bit of hangover after Monday’s approval of the stimulus package,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“It’s muted somewhat because the $2,000 additional package seems to be still out there but was killed for the moment by the Senate.”
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 the equities.
The S&P 500 index is on the cusp of a nearly 16% annual gain, after trillions of dollar in stimulus and progress in developing vaccines helped the benchmark index bounce back more than 70% from its late-March trough.
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 majority of gains led by FAANG stocks - Apple Inc, Facebook Inc, Amazon.com Inc, Netflix Inc and Alphabet Inc.
At 12:21 p.m. ET, the Dow Jones Industrial Average was up 164.52 points, or 0.54%, at 30,500.19, the S&P 500 was up 11.99 points, or 0.32%, at 3,739.03, and the Nasdaq Composite was up 41.11 points, or 0.32%, at 12,891.34.
Ten of the 11 major S&P 500 sub-sectors rose, with energy, materials and industrial gaining the most.
Boosting risk appetite globally, Britain approved the emergency use of AstraZeneca and Oxford University’s COVID-19 vaccine, which will start being administered on Monday.
Meanwhile, the first known U.S. case of a highly infectious coronavirus variant discovered in Britain was detected in Colorado.
Shares of payments network processor Mastercard Inc rose 2.5% 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 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 1.1%, while cruise operators Norwegian Cruise Line Holdings Ltd, Carnival Corp and Royal Caribbean Cruises Ltd were up between 1.5% and 2.3%.
Advancing issues outnumbered decliners by a 2.95-to-1 ratio on the NYSE and by a 2.48-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and one new low, while the Nasdaq recorded 107 new highs and 23 new lows.