Stocks traded modestly higher late Wednesday morning, as Wall Street benchmarks look likely to take a run at another round of records in the penultimate trading session of 2020.
What are major benchmarks doing?
-
The Dow Jones Industrial Average
DJIA,
rose 121 points, or 0.4%, to trade near 30,457. -
The S&P 500
SPX,
was up 13 points, or 0.4%, near 3,740. -
The Nasdaq Composite
COMP,
gained 45 points, or 0.4%, to trade near 12,895.
Stocks ended slightly lower Tuesday after pushing to all-time intraday highs in early action, a day after the Dow, S&P 500, and Nasdaq Composite closed at records.
What’s driving the market?
Thin end-of-year trading conditions could make for exaggerated market moves and make it more difficult than usual to discern whether action is being driven by events or money flows, analysts said.
“To me this just seems like a bit of a consolidation,” said Will Geisdorf, senior research analyst with Sarasota, Florida-based Allegiant Private Advisors. “We’ll drift through the holidays with light volume and maybe in the first-second week of January we’ll get some catalysts.”
“The reflation trade has gone a little too far, too fast,” he added. “The early stages of the vaccine roll-out have been underwhelming and people are reconsidering how fast the economy is going to bounce back. I think we’re waiting for things to get a little more organized and the vaccine rollout to spread, and people will get back to the reflation trade.”
The market’s drift lower on Tuesday was partly blamed on a lack of action by the Senate on bigger direct payments to households after the Democratic-controlled House on Monday passed legislation that would boost the size of payments from $600 to $2,000 after the $900 billion coronavirus financially aid package signed into law by President Donald Trump on Sunday.
Democrats have moved to back the call for bigger payments by President Donald Trump, but the Senate adjourned Tuesday without taking any action on the House bill to increase the size of the payments, with Majority Leader Mitch McConnell, R-Ky., hinting that he would like to tie the debate to other issues.
“If the Senate votes in favor of the plan, then equities could drift higher, while the opposite may be true in case of a rejection,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.
But any retreat sparked by the rejection of larger checks would be unlikely to last for long and could prove to be a buying opportunity, Pissouros said.
“We stick to our guns that the COVID vaccinations, the fiscal stimulus in the U.S., the Brexit accord, and a Biden presidency, may continue benefiting risk assets, while safe havens could stay under selling interest,” Pissouros said.
U.S. Treasury Secretary Steve Mnuchin said late Tuesday that direct deposit payments of $600 to many lower income Americans have begun and paper checks will start being mailed Wednesday.
Meanwhile, the U.S. counted at least 200,902 new COVID-19 cases on Tuesday, and at least 3,626 people died, according to a New York Times tracker. The new, more contagious COVID-19 variant recently discovered in the U.K. was detected in the U.S. for the first time, in Colorado, on Tuesday.
Also on the COVID front, AstraZeneca PLC
AZN,
AZN,
on Wednesday said the coronavirus vaccine it has developed with the University of Oxford has been approved by the U.K. government.
U.S economic data was mixed Wednesday. The U.S. trade deficit in goods climbed to $84.8 billion in November from $80.4 billion the month before, the Census Bureau said. Wholesale inventories ticked down 0.1% in November, rather than increasing as forecast, a good sign for economic demand.
The Chicago-area purchasing managers index rose to 59.5, higher than expected, in December, but pending home sales slid 2.6% in November, the National Association of Realtors said.
Which companies are in focus?
-
Tesla Inc.
TSLA,
shares were 1.2% higher after a Wedbush analyst suggested the company could deliver more than 500,000 cars in 2020. -
Spicemaker McCormick & Co.
MKC,
said that it has purchased Fona International, a flavor company focused on health and nutrition, its second acquisition in weeks. -
Shares of AstraZeneca
AZN,
rose 1.1% after the UK approved its coronavirus vaccine.
How are other markets trading?
-
In Asia, the Shanghai Composite
SHCOMP,
gained 1.1%, while Hong Kong’s Hang Seng Index jumped 2.2% and Japan’s Nikkei 225 Index closed 0.5% lower. -
London’s FTSE 100
UKX,
reversed course to trade 0.4% lower. The pan-European Stoxx 600 Europe index
SXXP,
slipped 0.1%. -
The yield on the 10-year Treasury note
TMUBMUSD10Y,
was virtually unchanged at 0.941%. Yields and debt prices move in opposite directions. -
Oil futures moved higher, alongside a fall in U.S. inventories. The U.S. benchmark West Texas Intermediate crude for February delivery
CLG21,
added 29 cents, or 0.6%, to $48.29 a barrel. -
Gold futures
GC00,
edged higher, up 0.4% to $1,891 as the dollar slipped. -
The U.S. dollar
DXY,
was 0.4% lower compared to a basket of trading partners.