Wall Street kicked off December with more milestones Tuesday after a broad rally for stocks pushed the S&P 500 and Nasdaq composite to new highs.
The S&P 500 gained 1.1%, with Big Tech companies and banks driving a big part of the rally. The strong opening to December follows a 10.8% surge for the broad index in November, marking its best month since April. The tech-heavy Nasdaq climbed 1.3%. Both indexes beat the record highs they set on Friday. Treasury yields also rose in another sign of optimism from investors.
Stocks have been ramping higher in recent weeks as investors focus on the possibility that coronavirus vaccines could soon help usher in a fuller global economic recovery. Meanwhile, lawmakers in Washington are debating once more whether to deliver another round of coronavirus relief to the economy before President Donald Trump leaves office.
“It seems like both the House and the Senate are trying to break this logjam,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “It seems the market is feeding off that.”
The S&P 500 rose 40.82 points to 3,662.45. The Dow Jones Industrial Average gained 185.28 points, or 0.6%, to 29,823.92. The Nasdaq climbed 156.37 points to 12,355.11. Small company stocks also added to their recent gains. The Russell 2000 index picked up 16.23 points, or 0.9%, to 1,836.05.
While the economic recovery has been stunted by a resurgence of the virus, investors are looking past much of that because of good progress on vaccine development. Several pharmaceutical companies have reported encouraging data recently suggesting their vaccine candidates are highly effective, raising hopes on Wall Street that the economy will begin to turn around next year as the vaccines are distributed to a world beaten down by the COVID-19 pandemic.
The Organization for Economic Cooperation and Development said in a report that the world economy will bounce back to its pre-pandemic levels by the end of next year, though the recovery will be uneven across the countries and many risks remain.
European regulators could approve a coronavirus vaccine developed by drugmakers Pfizer and BioNTech within four weeks. The companies have already asked for approval to begin vaccinations in the U.S. in December. Moderna is also asking U.S. and European regulators to allow emergency use of its COVID-19 vaccine.
Traders are also holding out hope that Democrats and Republicans may reach a deal on some amount of economic stimulus for the economy before 2021, but the parties remain divided on the details and the cost.
Unemployment remains high as the COVID-19 outbreak widens the gulf between average people and the wealthiest Americans. The virus, which has claimed more than 269,000 lives nationwide, is resurgent across the country amid holiday travel and colder weather sending people indoors.
President-elect Joe Biden on Tuesday repeated calls for Congress to pass immediate pandemic relief funding even before he takes office.
The coronavirus vaccine optimism, low interest rates, economic data that, while uneven, continue to point to a recovery, and now signs that Washington might take another stab at a stimulus bill are giving investors a green light to push stocks to new highs, said Samana.
“When you take it all together and piece it into a mosaic, to a lot of investors it seems like there’s no way to lose if all of these tailwinds are conspiring to drive equities higher,” he said, adding the market’s upward push may be getting “a bit overdone.”
Roughly 76% of the companies in the S&P 500 rose Tuesday, as did every sector in the index, except for industrials. Technology stocks led the way higher, with the Big Tech companies notching gains. Apple rose 3.1% and Microsoft gained 1%. Facebook climbed 3.5%, while Netflix added 2.8%. Google parent Alphabet rose 2.3% and Amazon gained 1.6%.
Banks, health care stocks and companies that rely on direct consumer spending also helped drive the market higher. JP Morgan Chase gained 1.6% and Pfizer rose 2.9%.
Early in Wall Street’s recovery this spring, it was Big Tech that almost singlehandedly carried the market higher on expectations that work-from-home and other trends would mean bigger profits for them. But hopes for a vaccine and return to economic normalcy have been helping boost stocks of companies whose profits are more closely tied to the economy’s strength.
Salesforce.com shares fell 4% in after-hours trading after the business software pioneer announced it is buying work chatting service Slack for $27.7 billion. The acquisition is by far the largest in the 21-year history of San Francisco-based Salesforce.
The yield on the 10-year Treasury rose to 0.93% from 0.83% late Monday, a big move. The higher yields also helped bolster financial stocks, since they allow banks to charge more lucrative interest rates on loans.
European and Asian markets rose.