The S&P 500 rose slightly on Tuesday, recovering some of their sharp losses from the previous session, as traders turned their focus to two key elections in Georgia.
The broader-market index advanced 0.1%, and the Nasdaq Composite climbed 0.4%. The Dow Jones Industrial Average, meanwhile, fell just 3 points.
Energy stocks advanced about 3% after OPEC and Russia reportedly reached a deal on an oil production plan. Chevron traded higher by more than 1%. The news also sent U.S. oil futures up about 5% to break above $50 per barrel for the first time since February.
Earlier in the session, stocks also got a boost after the release of better-than-expected U.S. manufacturing data. The Institute for Supply Management said its manufacturing index rose to 60.7 in December from 57.5 in November. Economists polled by Dow Jones expected the index to come in at 57.
Georgia runoff elections will determine whether Republicans can hold on to control in the Senate. Many fear that increased tax rates and more progressive policies could weigh on the market if Democrats gain control of the Senate.
However, such an outcome could create an opportunity for a bigger and faster spending package.
“Today’s Georgia Senate runoff could have substantial implications for the markets if both Democrat candidates win,” wrote Tom Essaye, founder of The Sevens Report. “We don’t view a Democrat Senate as a bearish game changer in the short term because there would still be a lot of positives in this market. But it would be a new and unaccounted for initial head-wind on stocks.”
Meanwhile, rising Covid-19 cases globally and new lockdown restrictions continued to keep investors on edge. More than 85 million Covid-19 cases have been confirmed globally, including 20.8 million in the U.S., according to data from Johns Hopkins University.
On Monday, England imposed a third coronavirus lockdown as the region grapples with a more transmissible variant of Covid-19. New York state has confirmed its first case of the new strain, Gov. Andrew Cuomo said Monday.
“Investors are feeling antsy this week,” Lindsey Bell, chief investment strategist at Ally Invest, said in an email. “COVID cases continue to spike, with a new variant of the virus spreading across the globe…runoff races in Georgia could decide the makeup of the Senate, and the market generally has performed better in a split Congress.”
The moves in stocks came after a sharp sell-off on Wall Street to kick off 2021. The S&P 500 fell 1.5% on Monday, posting its worst daily performance since Oct. 27. Ten out of 11 S&P 500 sectors registered losses, led by real estate.
The blue-chip Dow shed 382 points after tumbling as much as 700 points at its low of the day. The Nasdaq Composite declined 1.4% as the FAANG block all slumped to start the new year.
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