Stimulus optimism and Apple spark Wall Street rally

(Reuters) -Wall Street surged on Tuesday as optimism about a potential government stimulus kept spirits high, while investors bet on more signals of easy monetary policy from the Federal Reserve’s final meeting of the year.

FILE PHOTO: The U.S. flag is seen on a building on Wall St. in the financial district in New York, U.S., November 24, 2020. REUTERS/Brendan McDermid

Apple Inc was the top boost to all three U.S. benchmarks, jumping 4% to its highest since September after a report said it plans to increase iPhone production by 30% in the first half of 2021.

Some investors viewed the recent spike in coronavirus infections and deaths as a impetus for a quick deal on a COVID-19 stimulus bill, with economically sensitive sectors such as consumer discretionary, materials leading gains.

The S&P 500 utilities index climbed 2%, on track for its strongest one-day gain since early November.

“They have lagged, and you could see a little bit of rotation of people looking for yield,” said 6 Meridian Chief Investment Officer Andrew Mies, referring to utilities stocks.

Broad gains across the stock market were a healthy sign, Mies added.

U.S. House Speaker Nancy Pelosi invited top congressional leaders to meet in an effort to finalize a massive government spending deal and reach an agreement on a new package of coronavirus relief.

The Fed is also expected to signal low-interest rates for the foreseeable future in its two-day meeting starting Tuesday. The recent coronavirus vaccine roll-out is expected to improve the central bank’s 2021 outlook.

The Dow Jones Industrial Average was up 1.16% at 30,206.61 points, while the S&P 500 gained 1.19% to 3,690.79.

The Nasdaq Composite added 0.94% to 12,556.66.

Supported by Apple, the S&P 500 technology sector index added 1.3%. The sector has outperformed the broader market during the pandemic and is up over 35% year to date, with investors viewing it as resilient to virus-related disruptions.

“The market likes to go to tech when it is afraid the economy may stall because of a rise in infections and shutdowns,” said Christopher Grisanti, chief equity strategist at MAI Capital Management.

Increased liquidity and ultra-low lending rates have sent investors flocking to stocks for during the COVID-19 pandemic, while recent optimism over a vaccine pushed the S&P 500 to a series of record highs last week.

“We remain overweight on equities and have added selective exposure to more cyclically oriented sectors, including industrials, materials, semiconductors, housing and consumer durables,” Erin Browne and Geraldine Sundstrom, managing directors at investment manager PIMCO wrote in a note.

Eli Lilly and Co jumped 5% after the company said it would buy Prevail Therapeutics Inc in a deal potentially valued at $1 billion to expand its presence in the lucrative field of gene therapy. Prevail’s shares surged about 80%.

Moderna Inc’s shares fell more than 6%, even after U.S. Food and Drug Administration staff members did not raise any new concerns over data on the drugmaker’s COVID-19 vaccine. A report said the vaccine will gain emergency use approval on Friday.

Advancing issues outnumbered declining ones on the NYSE by a 3.07-to-1 ratio; on Nasdaq, a 2.03-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 150 new highs and 17 new lows.

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