National Post (National Edition)
U.S. stock indexes hit record closing highs
NEW YORK • Wall Street advanced on Monday, with all three major U.S. indexes reaching record closing highs as long-awaited pandemic relief and Brexit trade deals fueled investors’ risk appetite.
U.S. equities followed their European counterparts with a broad rally, and communications services and consumer discretionary stocks led the charge.
But crude oil prices slumped as weak demand and a potential increase in production offset the effects of the U.S. fiscal aid package signed late on Sunday by President Donald Trump.
Markets in Canada and Britain were closed on Monday in observance of the Boxing Day holiday.
He reversed course by signing a US$2.3 trillion stimulus and spending bill into law, heading off a potential government shutdown and setting the stage for congressional Democrats to push for more robust direct payments of US$2,000 to millions of Americans.
“Finally something has gotten done and it’s given the market reason to be optimistic,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “We’ve still got dark day days ahead with COVID, but with the stimulus package and Brexit deal, it gives us reason to focus on the positive.”
Britain reached a trade agreement with the European Union on Thursday, days before leaving one of the world’s largest trading blocs, and urged businesses to prepare for disruptions resulting from the completion of Brexit.
The Dow Jones Industrial Average rose 204.1 points, or 0.68 per cent, to 30,403.97, the S&P 500 gained 32.3 points, or 0.87 per cent, to 3,735.36 and the Nasdaq Composite added 94.69 points, or 0.74 per cent, to 12,899.42.
European shares had their strongest close in 10 months and German shares hit an alltime high on the U.S. stimulus and Brexit trade deals.
The ongoing rollout of coronavirus vaccines also buoyed sentiment, with Pfizer Inc announcing it expects to complete distribution of 200 million doses in Europe by September.
The pan-European STOXX 600 index rose 0.66 per cent and MSCI’s gauge of stocks across the globe gained 0.55 per cent.
Not all the stock moves set records. Some of the year’s most expensive stocks encountered a wave of selling as investors moved to lock in gains in the last week of 2020.
Zoom Video Communications Inc. and DocuSign Inc., fell more than six per cent on Monday. Both companies have seen their shares soar this year amid a surge in new users and are trading at more than 20 times next year’s projected sales. The average price to estimated sales multiple in the technology-heavy Nasdaq 100 Stock Index is 4.6 times, according to data compiled by Bloomberg.
Among other notable decliners were digital-ad company Trade Desk Inc., which fell 11 per cent, and data-mining company Palantir Technologies Inc., which suffered a 7.6-percent drop. DoorDash, the food-delivery company whose shares debuted earlier this month, sank 6.7 per cent.
Crude prices dropped as the prospect of increased OPEC+ output in the face of weak demand dampened stimulus cheer.
U.S. crude dropped 1.26 per cent to settle at US$47.62 barrel. Brent settled at US$50.86 per barrel, down 0.84 per cent on the day.
Gold reversed its early gains as the dollar recovered its losses amid the stocks rally.
Spot gold dropped 0.2 per cent to US$1,872.87 an ounce.
U.S. Treasury yields rose early in the session but gave up those gains by the end of the session as the risk-on rally lost some steam.
Benchmark 10-year notes last rose 1/32 in price to yield 0.9264 per cent, from 0.93 per cent late on Thursday.
The 30-year bond last rose 4/32 in price to yield 1.6616 per cent, from 1.666 per cent late on Thursday.
The dollar was flat against a basket of world currencies but the euro gained strength as investors priced out Brexit risk.
The dollar index rose 0.03 per cent, with the euro up 0.06 per cent to US$1.2211.
The Japanese yen weakened 0.32 per cent versus the greenback at 103.84 per dollar, while sterling was last trading at US$1.3445, down 0.76 per cent on the day.