S&P Closes At New High, Dow Jumps 200 Points As Stimulus Talks Pick Back Up

Topline

After a lukewarm end to the best month for stocks in decades, the major indexes snapped back on Tuesday as investors continued to pile into recently unloved industries like energy and financials as Wall Street eyes an end to the pandemic fueled by widespread vaccination and fiscal relief.

Key Facts

The Dow Jones Industrial Average edged up 185 points, or 0.6%, on Tuesday, and the S&P 500 climbed 1.1% to a new record high, while the tech-heavy Nasdaq, whose performance has deviated from the broader-market indexes during the past weeks’ market rotation, jumped 1.3%.

Tesla shares added 3% after S&P Global revealed updated plans to add the electric carmaker’s shares to the S&P in one single tranche (as opposed to the two-step process previously indicated) before the market open on December 21; Tesla stock has skyrocketed up more than 40% since the announcement of its addition to the S&P.

Other stocks leading market gains on Tuesday were well indicative of the market rotation toward industries tanked by the pandemic, namely those in financials, with Lincoln National, Capital One and Cincinnati Financial all up close to 5%.

Shares of pandemic market favorite Zoom Video, on the other hand, plummeted 15% after the firm reported slowed sales growth in its third quarter that–although much better than analysts expected–also came with updated guidance reflecting further growth deceleration in quarters to come.

One day after DoorDash revealed it’s targeting a $32 billion valuation for its initial public offering, Airbnb has said it’s looking to raise roughly $2.5 billion and eyeing a $35 billion valuation–nearly twice as much as its last private valuation of $18 billion earlier this year–with its own public debut, expected on the Nasdaq later this month.

Global markets also rallied after a lukewarm Monday: The United Kingdom’s FTSE 100 climbed 1.9%, while France’s CAC 40 edged up 1.1%, and Japan’s Nikkei 225 ended the day up 1.3%.

Crucial Quote 

“Stocks are kicking off the month of December with solid gains around the world, but it’s hard to attribute the rebound to any particular piece of news from the last 12 hours,” noted Vital Knowledge Media Founder Adam Crisafulli, adding that vaccine optimism (as Moderna and Pfizer move forward with requesting approvals in Europe), solid economic data from China and encouraging signs of fiscal stimulus negotiations in Washington could all be partly responsible for gains. “Overall, stocks are picking up right where they left off on Friday, with Monday looking like a month-end aberration.”

What To Watch For

With a December 11 government shutdown deadline approaching, stimulus talks resumed in Washington on Tuesday morning after a bipartisan group of lawmakers unveiled a $908 billion framework for the next bill, though they also acknowledged that neither the White House nor party leaders were yet on board with the proposal. Meanwhile, House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin, who’ve been heading up negotiations for Democrats and the White House, respectively, spoke over the phone to discuss fiscal relief for the first time since October on Tuesday.

Big Number

$27.7 billion. That’s how much Salesforce will effectively pay to acquire Slack, the firms finally revealed on Tuesday after nearly a week of speculation.

Tangent

Earnings. Okta, Dollar General, Kroger, DocuSign and Big Lots are all among firms slated to release earnings Wednesday through Friday.

Key Background

Amid a slew of record highs for the major indexes, the S&P just posted its best November ever, while the Dow nabbed its best monthly performance in more than 30 years. The labor market and other economic indicators, however, have been flashing serious warning signs. Moody’s warned over the weekend that it could take four years to recover the 22 million lost during the pandemic in March and April. Additionally, despite record-low mortgage rates, higher costs pushed pre-owned home sales down in October for a second month in a row, according to a report from the National Association of Realtors released on Monday, and new manufacturing data showed that production output and new factory orders are also falling as Covid-19 cases surge to new highs nationwide. “Storm clouds are gathering,” George Ratiu, a senior economist at Realtor.com told Reuters on Monday. “This winter could pose an unusual challenge for many people across the country, unless Congress takes significant actions.”

Further Reading

Stimulus Isn’t Dead Yet: Pelosi And Mnuchin Are Talking Again, McConnell Unveils Another Skinny Bill, And Moderates Are Pushing A New $900 Billion Plan (Forbes)

It Could Take 4 Years To Recover The 22 Million Jobs Lost During Covid-19 Pandemic, Moody’s Warns (Forbes)

Dow Falls Nearly 300 Points But Still Posts Its Best Month In Over 30 Years (Forbes)

1.3 Million More Americans Could Lose Their Jobs As Daily Covid Cases Skyrocket, But A Double-Dip Recession Is Unlikely, Says Moody’s (Forbes)

Comments are closed.