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U.S. stocks were trading at session highs Tuesday afternoon, lifted by last-ditch efforts by Congress to complete another round of aid spending, as COVID-19 cases surge and before some benefits expire.
What are major indexes doing?
- The Dow Jones Industrial Average DJIA, +1.15% rose 278 points, or 0.9%, to 30,142.
- The S&P 500 SPX, +1.19% was up 36 points, or 1%, at 3,683.
- The Nasdaq Composite COMP, +0.90% advanced 94 points, or 0.8%, to 12,535.
- The Russell 2000 RUT, +1.95% of small-cap stocks was up 28 points, or 1.5%, at 1,942.
Stocks saw a mostly lower finish Monday, with the Dow closing in negative territory after an early push to an intraday record.
What’s driving the market?
Stocks traded at session highs after House speaker Nancy Pelosi invited congressional leaders to meet on Tuesday afternoon to hash out a coronavirus aid package and a government spending plan to avoid a shutdown by the weekend.
The move comes after a bipartisan group of House and Senate lawmakers on Monday proposed a two-part package that would separate the most contentious issues holding up approval from a $748 billion proposal that incorporates widely supported measures, including extended unemployment benefits and aid to business. Thornier issues, including liability protections for businesses and aid to state, local and tribal governments were put into a proposed $160 billion package.
“Although the current proposal is far more modest than the fiscal packages floated earlier in the year (at $700 billion it is only about one third as large) it nevertheless is viewed by the market as better than nothing at a time when many U.S. citizens are on the precipice of homelessness given the contraction of economic activity due to fresh wave of lockdowns,” said Boris Schlossberg, managing director at BK Asset Management, in a note.
If lawmakers leave Washington without a deal, “the policy error could be very costly for the U.S. economy in Q1,” he said.
Some market watchers see stocks vulnerable to near-term weakness after a historic November rally and further gains in December.
“We believe there is still a little too much enthusiasm in an otherwise healthy environment,” said Tony Dwyer, chief market strategist at Canaccord Genuity, in a note. “The combination of extreme bullishness, broad acceptance of the economic recovery rotation, and a historic ramp in our favored areas have us looking for a near-term pause in the upside.”
Meanwhile, the rollout of the vaccine developed by Pfizer Inc. PFE, -1.56% and BioNTech SE BNTX, +1.97% continued, with the first vaccinations delivered on Monday.
Later this week, a Food and Drug Administration advisory committee will meet to discuss whether Moderna Inc.’s MRNA, -5.36% COVID-19 vaccine candidate should be authorized for use. Data released by the FDA Tuesday showed the vaccine was “highly effective.” Moderna shares fell 5.3% but remain up by around 650% in the year to date.
The U.S. saw more than 1,600 fatalities from COVID-19 on Monday, bringing the death toll to more than 300,400 and the country saw 201,073 new cases on Monday, according to a New York Times tracker. The U.S. has averaged 209,600 cases a day over the past week, up 31% from the average two weeks earlier. There was a record 110,549 COVID-19 patients in U.S. hospitals on Monday, according to the COVID Tracking Project, topping the previous record of 109,298 set a day earlier.
The Federal Reserve will begin a two-day policy meeting Tuesday, its final gathering of 2020.
Read: 4 things to watch when the Fed meets on Wednesday
Business activity in the New York state expanded only slightly in December, according to the latest survey from the New York Fed released Tuesday. The bank’s Empire State business conditions index slipped to 4.9 in December from 6.3 in the prior month. Economists were expecting a gain to 7.2, according to Econoday. The Empire State index has fallen steadily after hitting 17 in September.
U.S. November industrial production showed a 0.4% rise, after a revised 0.9% increase in October.
“Manufacturing’s strong performance this year isn’t likely to be repeated in 2021. An end to the health crisis is slowly coming into view, but less buoyant demand, some lingering Covid-related supply chain disruptions, and less stimulative fiscal policy will constrain manufacturing activity next year,” said Oren Klachkin, lead U.S. economist at Oxford Economics after the Empire State data.
“Additionally, double dip recession risks will continue to run high if Congress doesn’t provide more fiscal relief and the health crisis isn’t over,” he said.
Which companies are in focus?
- Shares of Eli Lilly & Co. LLY, +5.20% were4.3% higher after the drugmaker raised its full-year profit outlook and provided an upbeat 2021 revenue forecast. It also announced a $1.04 billion deal to acquire gene therapy company Prevail Therapeutics Inc. PRVL, +82.36%. Shares of Prevail rose 84%.
- Apple Inc. AAPL, +4.01% shares rose more than 4.1% after Nikkei Asia reported that the company intends to produce 95 million to 96 million iPhones during the first half of 2021, which would mark an increase of almost 30% from a year earlier.
- Shares of Twitter Inc. TWTR, +0.11%, Facebook Inc. FB, -0.56%, Amazon.com Inc. AMZN, -0.02% were lower after federal regulators on Monday ordered them and other social media companies to provide detailed information on how they collect consumer’s personal data, including children and teens.
What are other markets doing?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 0.918% rose 1 basis point to 0.91%.
- The ICE U.S. Dollar Index DXY, -0.24%, a measure of the currency against a basket of six major rivals, was off 0.2%.
- The pan-European Stoxx 600 Europe index SXXP, +0.25% closed 0.3% higher, while London’s FTSE 100 benchmark UKX, -0.28% fell 0.3%.
- Oil futures pushed higher a day after closing at nine-month highs, with the U.S. benchmark CL.1, +0.94% up 1.1% near $47.50 a barrel.
- Gold futures GC00, +1.29% were also higher, with the February contract up 1.2% near $1,854 an ounce.
