S&P 500, Nasdaq on track for record close on renewed hopes for fiscal aid package

What are major benchmarks doing?

• The Dow Jones Industrial Average
  DJIA,
  +0.66%
  was up 193.54 points, or 0.7%, at 29,832.18 after briefly trading above its record close of 30,046.24 in earlier action.

• The S&P 500
  SPX,
  +1.08%
  was up 37.90 points, or 1.1%, at 3,659.53, trading above its Friday record close of 3,638.35.

• The Nasdaq Composite
  COMP,
  +1.12%
  was also trading above its all-time closing high, rising 132.77 points, or 1.1%, to 12,331.51.

Stocks finished lower on Monday, but saw a month of historic gains that saw major benchmarks touch all-time highs. For the month:

• The Dow rose 11.8%, its biggest monthly rise since January 1987 and its biggest November gain since 1928.

• The S&P 500 gained 10.8%, for its biggest monthly advance since April and its largest November rise since 1928.

• The Nasdaq Composite saw an 11.8% gain, its biggest monthly rise since April and best November advance since 2001.

• The small-cap Russell 2000 jumped 18.3%, its largest monthly rise on record.

What’s driving the market?

Analysts tied support, in part, to efforts to revive talks toward a new round of coronavirus aid on Capitol Hill, after a bipartisan group of lawmakers proposed a $900 billion package.

Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell, testifying before a Senate panel, appeared to welcome the effort. News reports said Mnuchin and house Speaker Nancy Pelosi, D-Calif., were scheduled to discuss prospects for a package in a phone call Tuesday afternoon.

“Whether its fiscal stimulus, or Powell coming out to say the foot’s going to be one the gas, that’s what the market wants to hear. It’s not necessarily about the fundamentals,” said Joe Saluzzi, co-head of equity trading at Themis Securities, in an interview.

November gains for equities were tied in large part to optimism over progress toward a COVID-19 vaccine, with three candidates showing promise in late-stage trials.

With pharmaceutical manufacturers seeking emergency approval from governments in the U.S. and Europe, prospects for widespread distribution by early next year stoked expectations for a broader global economic recovery.

“December is kicking off in notable fashion as global equity markets are pressing higher after a very impressive month of performance in November,” said Yousef Abbasi, global market strategist at StoneX. “At this point, we may see investors move with a calendar-driven approach to rebalancing into pro-cyclicals. ”

As a result, investors are looking past a sharp rise in COVID-19 cases in the U.S. and Europe but some analysts contend the rally is likely to be challenged in coming weeks as worries mount over the economic toll from rising cases amid a lack of additional aid spending out of Washington.

The joint appearance by Powell and Mnuchin in Tuesday’s hearing comes after the Treasury secretary last month unexpectedly told the Fed he wouldn’t extend five lending programs served as a backstop to municipal and corporate debt markets and to purchase loans made to small businesses and nonprofits when they expire on Dec. 31.

Read: Mnuchin, Powell face questions from lawmakers on curtailed coronavirus loan programs

On the retail front, Cyber Monday wrapped up with $10.8 billion in sales, up 15.1% from last year and setting a record for the biggest online sales day in U.S. history, according to data from Adobe Analytics
ADBE,
-0.16%.

In U.S. economic data, the IHS Markit final manufacturing purchasing managers index reading for November was unchanged at 56.7 from its initial reading.

The Institute for Supply Management’s November manufacturing index slipped to 57.5% from an October reading of 59.3%. Economists surveyed by MarketWatch had looked for a decline to 58%. A reading of more than 50% signals an expansion in activity.

However, a drop in the ISM’s employment subindex into contraction territory at 48.4% from 52.3% in October offered some worrying signs on the labor-market front.

Separately, October construction spending showed a rise of 1.3%, versus expectations for a 1% rise.

Investors will also hear from Fed Gov. Lael Brainard and San Francisco Fed President Mary Daly over the course of the day.

Which companies are in focus?

• BlackBerry Ltd.
  BB,
  +24.27%
  shares soared 23% after the security software services company and Amazo.com Inc.’s
  AMZN,
  +1.41%
  Amazon Web Services Inc. cloud business announced a “multiyear, global agreement” to develop BlackBerry’s Intelligent Vehicle Data Platform, IVY.

• Shares of Tesla Inc.
  TSLA,
  +2.41%
  were up 2.5% after S&P Dow Jones Indices late Monday said it would add the electric vehicle maker to the S&P 500 in one swoop on Dec. 21. Analysts had widely expected the company to be added to the index in tranches.

• Zoom Video Communications Inc.
  ZM,
  -15.67%
  shares fell 15.4%, under pressure despite another blockbuster quarter fueled by the popularity of the company’s videoconferencing software, which has continued to be a lifeline for users during the COVID-19 pandemic.

• In deal news, health care equipment company AdaptHealth Corp.
  AHCO,
  +19.32%
  announced an agreement to buy AeroCare Holdings Inc., a respiratory and home medical equipment distribution company, in a cash and stock deal valued at just over $2 billion. AdaptHealth shares were up over 17%.

• Airbnb
  ABNB,
  -1.62%
  set terms for its initial public offering on Tuesday with plans to offer 51.9 million shares priced at $44 to $50 each. The global online-rental platform would raise $2.595 billion at the top of that range. Airbnb has applied to list on Nasdaq under the ticker ‘ABNB.’

• Shares of Exxon Mobil Corp.
  XOM,
  +1.46%
  were up 1.9% after the oil giant late Monday said it would write down the value of is natural gas assets by $17 billion to $20 billion as it increases its focus on more profitable oil plays.

What are other markets doing?

• The yield on the 10-year U.S. Treasury note
  TMUBMUSD10Y,
  0.931%
  rose 7.9 basis points to 0.921%, amid signs of expanding international economic activity. Yields and bond prices move in opposite directions.

• The ICE U.S. Dollar Index
  DXY,
  -0.61%,
  which measures the currency against a basket of six major rivals, was off 0.6% a day after dipping to a more-than-two-year low.

• In Asia, the Shanghai Composite Index
  SHCOMP,
  +1.77%
  rose 1.8%, while Hong Kong’s Hang Seng Index
  HSI,
  +0.85%
  gained 0.9% and the Japan’s Nikkei 225 index
  NIK,
  +1.33%
  advanced 1.3%.

• In Europe, the Stoxx 600 Europe index
  SXXP,
  +0.65%
  rose 0.7%, while London’s FTSE 100
  UKX,
  +1.89%
  jumped 1.9%.

• Oil futures fell, with the U.S. benchmark
  CL.1,
  -1.65%
  settling down 1.7% to settle at $44.55 a barrel, the lowest front-month finish since Nov. 23, as OPEC+ deferred a meeting in an effort to reach a consensus on whether to extend existing output curbs.

• Gold futures
  GC00,
  +2.08%
  rose $38, or 2.1%, to settle at $1,818.90 an ounce to trade back above $1,800 an ounce.