Stocks traded higher on Monday ahead of the final trading week of 2020 and as President Donald Trump unexpectedly signed an economic relief bill.
The Dow Jones Industrial Average jumped 207 points, or 0.7%. The S&P 500 climbed 0.7%, and the Nasdaq Composite rose 0.6%. All three major indexes hit record highs at the open.
President Donald Trump signed a $900 billion Covid-19 relief bill into law, averting a government shutdown and extending unemployment benefits to millions of Americans. The signing came days after Trump suggested he would veto the legislation, demanding $2,000 direct payments to Americans, instead of $600.
“All the bluster neither significantly changed to outlook for stocks, as markets still expected (and ultimately received) stimulus of a minimum of $900 billion to pass,” wrote Tom Essaye, founder of The Sevens Report.
“The five pillars of the rally (Federal stimulus, FOMC stimulus, vaccine rollout, divided government and no double dip-recession) re-main largely in place, and until that changes, the medium and longer-term outlook for stocks will be positive,” Essaye added.
Apple led the Dow higher, rising 2.5%. Tech and materials were the best-performing sectors in the S&P 500, gaining 0.9% and 0.8%, respectively.
Wall Street is coming off a quiet holiday week where the major averages were flat. The S&P 500 fell 0.2% last week as some investors took the chips off into the year-end. The 30-stock Dow eked out a 0.1% gain for the same period.
Profit-taking could ramp up in the final week of the year, which has so far seen surprisingly strong returns. The S&P 500 has gained 15.4% year to date, while the Dow has climbed 6.4%. The Nasdaq has soared 43.2% this year as investors favored high-growth technology names during the ongoing Covid-19 pandemic.
Dr. Anthony Fauci warned on Sunday that the country could see a surge in new Covid-19 infections after Christmas and New Year’s celebrations. Two vaccines by Pfizer and Moderna have begun the distribution process this month. So far over one million people in the U.S. have been vaccinated.
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