Before The Bell
The bulls were out in force to begin the week on Monday, with the three major averages reaching all-time highs.
Stocks opened the final trading week of the year sharply higher, boosted by positive sentiment that the recently signed $900 billion government relief package would push the economy forward.
After an hour of trading, the Dow Jones Industrial Average was up more than 300 points, or about 1%. The S&P 500 and the NASDAQ were also solidly in positive territory, if less on a percentage basis than the Dow.
The Dow’s relative outperformance reflected strength in the energy, materials, and financial sectors. Those segments were among the worst hurt by the economic troubles earlier in 2020.
By the noon hour on the East Coast, the Dow had settled back a bit, as a dip in oil prices contributed to a pullback in energy and materials stocks. There is some concern about increased supplies ahead of next week’s OPEC meeting. But the S&P and the NASDAQ held steady in a firm market overall.
Favorable developments on several fronts, including the relief package, vaccine distribution, the Federal Reserve’s extra efforts to bolster the economy, and the resolution of Brexit terms, kept stocks buoyant.
Otherwise, it was a quiet day for business news, as will be the case for much of the week. Wednesday will bring a report on the Chicago PMI (Purchasing Managers’ Index) for December that is expected to show a continued recovery in activity in the region. On Thursday, data on weekly initial jobless claims is projected to reveal a still-elevated level of claims, above 800,000.
We note that the bond market closes early at 2:00 p.m. EST on Thursday ahead of the New Year’s holiday. The stock market will put in a full session on Thursday to allow for last-minute trades, though. U.S. markets are closed on Friday.
In the end, the session was marked by a positive tone towards shares of companies, such as airlines, leisure, and hospitality that stand to benefit from a return to normal everyday activities.
So-called stay-at-home stocks were less sought after.
The final tally showed the Dow Jones Industrial Average climbing 204 points; the S&P 500 rising 32 points; and the NASDAQ advancing 95 points on a good day for investors.
The yearend rally shows signs of continuing on Tuesday with stock futures pointing higher about a half hour before the start of trading. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
