The S&P 500 and Nasdaq Composite indexes closed at record highs on Tuesday, with investors betting a COVID-19 vaccine will be available soon, and more confident about a speedy economic recovery following upbeat Chinese factory data.
Investors stayed focused on updates about a handful of vaccine candidates and the start of global shipments as drugmakers submit paperwork for regulatory approvals.
Pfizer Inc jumped almost 3% after the drugmaker and Germany’s BioNTech SE sought emergency approval of their vaccine candidate from the European regulator.
The partners are neck-and-neck with rival Moderna Inc , which also applied for emergency approval from the European regulator. Its stock tumbled nearly 8% from a record high the day before.
“There is this optimism about what it means as we see news around vaccines emerge,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Minneapolis.
“As we look toward a health solution, we could be sitting on a coiled spring of economic activity, but it could take a while for it to be unleashed.”
Earlier in the day, global equities got a boost from data that showed China’s factory activity in November increased at its fastest pace in a decade. Several other countries also reported sharp upticks in factory activity.
U.S. data showed a recovery in manufacturing activity lost momentum in November.
All 11 S&P 500 sector indexes rose, with communication services up 2% and the leading gains.
In extended trade, Slack Technologies fell 1% after Salesforce.com Inc agreed to buy the messaging app company in a $28 billion deal. Salesforce fell 3.5%.
On Tuesday, investors also focused on remarks by U.S. Treasury Secretary Steve Mnuchin and Federal Reserve Chair Jerome Powell at the Senate Banking Committee, where they agreed on the need for more aid for small businesses.
Meanwhile, a bipartisan group of U.S. lawmakers unveiled a $908 billion COVID-19 relief bill aimed at breaking a months-long deadlock between Democrats and Republicans over new emergency assistance for small businesses, unemployed people, airlines and other industries during the pandemic.
On Wall Street, the Dow Jones Industrial Average rose 185.28 points, or 0.63%, to 29,823.92, the S&P 500 gained 40.82 points, or 1.13%, to 3,662.45 and the Nasdaq Composite added 156.37 points, or 1.28%, to 12,355.11.
All three main stock indexes gained more than 10% in November.
Zoom Video Communications Inc slumped 15% after warning its gross margins would remain under pressure going into 2021.
Tesla Inc rose 3% after S&P Dow Jones Indices said it would add one of Wall Street’s most valuable companies to the S&P 500 index in one go on Dec. 21, rather than in two tranches.
Micron Technology Inc advanced 4.7% as the chipmaker increased its revenue, gross margin and earnings forecast for the first quarter.
Advancing issues outnumbered declining ones on the NYSE by a 2.45-to-1 ratio; on Nasdaq, a 1.38-to-1 ratio favored advancers.
The S&P 500 posted 48 new 52-week highs and no new lows; the Nasdaq Composite recorded 185 new highs and 8 new lows.
Volume on U.S. exchanges was 13.5 billion shares, compared with the 11.5 billion average over the last 20 trading days.
Stock markets rose and safe havens such as U.S. Treasury bonds dipped Tuesday as strong factory data and signs that coronavirus vaccinations could be administered by the end of the year helped prolong a worldwide rally in risk assets even as the pandemic accelerated.
Bets on more easing from the U.S. Federal Reserve to help the economy through the winter weighed on the dollar as riskier currencies rose. Crude prices fell after oil-producing countries delayed a decision on output cuts.
Pfizer Inc said it had asked for emergency European Union authorization of its vaccine after a similar move in the United States last month.
On Monday, Moderna Inc applied for U.S. authorization after full results from a late-stage study showed it was 94.1% effective with no serious safety concerns.
“We believe the rally can continue, with the current pipeline of expected vaccine rollouts, in line with our central scenario of widespread availability in the second quarter of 2021,” said Mark Haefele, chief investment officer at UBS Global Wealth Management in Zurich.
MSCI’s gauge of stocks across the globe gained 1.16% following broad gains in Europe and Asia, with Japan’s Nikkei closing near a 29-1/2-year high.
China’s blue-chip CSI300 index rose 2.2% after a business survey showed factory activity accelerated at the fastest pace in a decade in November. In the UK last month, factories recorded their fastest growth in almost three years, a survey showed.
In November, breakthroughs in vaccine developments from Pfizer, Moderna and AstraZeneca along with a market-friendly outcome of the U.S. presidential election helped the MSCI world stock index score its biggest monthly rise on record, up 12% to new all-time peaks.
Coronavirus cases have touched multimonth highs in South Korea, Hong Kong and Europe over the last week, while the United States posted a record 4.2 million new cases in November.
“What we are seeing today is that upward trend reasserting itself, given the positive news on the vaccine front, China’s growth picking up, and the tremendous faith in the ability of central banks to keep the markets afloat,” said Stephen Miller, market strategist for GSFM Funds Management.
In foreign exchange markets, the dollar fell a day after closing November with its biggest monthly loss since July and investors bracing for more U.S. monetary easing.
In a speech released late on Monday, Fed Chair Jerome Powell said a slowing recovery and a surging pandemic meant the United States was entering a “challenging” few months, with the potential deployment of a vaccine still facing hurdles.
Benchmark 10-year U.S. Treasury notes last fell 24/32 in price to yield 0.9194%, from 0.842% late on Monday, as Congress began a two-week sprint to secure funding and avoid a possible government shutdown.
Oil prices fell after leading producers delayed talks on 2021 output policy, while the pandemic kept sapping fuel demand.
U.S. crude fell 1.68% to $44.58 per barrel and Brent was at $47.38, down 1.04% on the day.
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