U.S. Stocks Rally As Congressional Leaders Meet To Discuss Stimulus
After closing mixed for three consecutive sessions, stocks moved sharply higher over the course of the trading day on Tuesday. With the rally on the day, the tech-heavy Nasdaq ended the session at a new record closing high.
The major averages all finished the day firmly in positive territory. The Dow jumped 337.76 points or 1.1 percent to 30,199.31, the Nasdaq surged up 155.02 points or 1.3 percent to 12,595.06 and the S&P 500 shot up 47.13 points or 1.3 percent to 3,694.62.
The rally on Wall Street came amid unrelenting optimism lawmakers will eventually agree on a new fiscal stimulus bill,
Stocks accelerated to the upside following news that House Speaker Nancy Pelosi has scheduled a meeting with other congressional leaders to discuss a relief package.
Pelosi is due to meet with Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer and House Minority Leader Kevin McCarthy, while Treasury Secretary Steven Mnuchin will participate by phone.
In a post on Twitter on Monday, Pelosi’s Deputy Chief of Staff Drew Hammill noted the Speaker and the Treasury Secretary spoke by phone and “discussed the urgency of the committees finishing their work as soon as possible.”
Hammill said Pelosi reiterated Democrats’ concerns about liability provisions, which remain an obstacle to securing state and local funding.
The conversation between Pelosi and Mnuchin came as bipartisan group of lawmakers publicly released their latest proposal, which was largely in line with a report from Reuters on Monday.
The proposal calls for a previously unveiled $908 billion bipartisan relief plan to be split into two proposals that could be voted on separately in order to win approval.
One bill would be a $748 billion measure including money for small businesses, the jobless and COVID-19 vaccine distribution, while the other would include more controversial measures such as liability protections for business and aid for state and local governments.
Adding to the positive sentiment, the Federal Reserve released a report showing U.S. industrial production rose by slightly more than expected in the month of November.
The report said industrial production climbed by 0.4 percent in November following a downwardly revised 0.9 percent advance in October.
Economists had expected industrial production to rise by 0.3 percent compared to the 1.1 percent jump originally reported for the previous month.
Gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 3.9 percent.
The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for February delivery spiking $23.20 to $1,855.30 an ounce.
Significant strength was also visible among oil service stocks, as reflected by the 3.5 percent jump by the Philadelphia Oil Service Index. The strength in the sector came as crude oil for January delivery climbed $0.63 to $47.62 a barrel.
Computer hardware stocks also saw considerable strength on the day, resulting in a 3.1 percent advance by the NYSE Arca Computer Hardware Index. The index ended the session at a record closing high.
Steel, brokerage and airline stocks also showed notable moves to the upside, reflecting broad based buying interest on Wall Street.
In overseas trading, stock markets across the Asia-Pacific region moved modestly lower during trading on Tuesday. Japan’s Nikkei 225 Index dipped by 0.2 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.
Meanwhile, the major European markets turned in another mixed performance on the day. While the U.K.’s FTSE 100 Index fell by 0.3 percent, the French CAC 40 Index inched up by 0.1 percent and the German DAX Index surged up by 1.1 percent.
In the bond market, treasuries moved to the downside after ending the previous session nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.1 basis points to 0.923 percent.
The Federal Reserve’s monetary policy announcement is likely to be in focus on Wednesday, as the central bank is widely expected to leave interest rates unchanged but many traders are optimistic the Fed will provide additional stimulus.
Reports on retail sales, homebuilder confidence and business inventories may also attract attention along with any developments on Capitol Hill.
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