Inside Tuesday's Historic Dow Move
By Anna Hirtenstein and Paul Vigna
U.S. stocks surged Tuesday, with the Dow Jones Industrial
Average crossing 30000 for the first time, after President Trump
said his aides would cooperate with President-elect Joe Biden's
transition to the White House.
That news eased investors' concerns about a drawn-out period of
uncertainty and added more steam to a recent rally that has been
spurred by promising results from potential coronavirus
The 30-stock index of blue-chip companies opened modestly
higher, and the gains accelerated as the morning progressed. The
index flirted with the milestone several times before crossing the
mark shortly before 11:30 ET.
The Dow ended the session up 454.97 points, or 1.5%, to
30046.24, its ninth record close of 2020. The index is up 62% from
its March lows and 5.3% for the year.
"Investors are showing faith in the idea of a recovery by
midyear 2021," said Shawn Snyder, head of investment strategy at
Citi Personal Wealth Management. Indexes like the Dow and Russell
2000, which include more cyclical companies closely tied to the
strength of the economy, are plays on that recovery, he said.
President Trump, who often tweets about the rallying stock
market, called the 30000 milestone a "sacred number" in a short
Investors are cheering signs that a protracted fight over
control of the White House is potentially drawing to a close,
reducing political risks over the winter months. The General
Services Administration chief said Monday that her agency would
provide Mr. Biden federal resources meant to assist in a smooth
transfer of power. Mr. Trump also said he has instructed aides to
help with the transition.
"This is very positive: it means that we finally might get an
orderly transition process," said Luc Filip, head of private
banking investments at SYZ Private Banking. "That would relieve
some of the uncertainties that have been weighing on the market
over the past two to three weeks."
The S&P 500 also set a fresh record. The index gained 57.82
points, or 1.6%, to 3635.41. The Nasdaq Composite rose 156.15
points, or 1.3%, to 12036.79, its second-highest close ever.
The strength of the rally since March has surprised even market
veterans. If the S&P 500 finishes the year higher -- it's up
more than 12% now -- it would be the first time the index fell 30%
or more during a year and still finished that year higher, said
Ryan Detrick, chief market strategist for LPL Financial.
"Who in their right minds would've thought that in April?" he
Still, he cautioned against getting too excited, especially
given the fervor with which investors are buying risk assets across
the board. "Market sentiment is getting pretty excited, but the
market has a funny way of not rewarding the masses," he said. A
slowdown or pullback from these levels would be completely normal,
Optimism also increased Monday after The Wall Street Journal
reported that Mr. Biden plans to select former Federal Reserve
Chairwoman Janet Yellen as Treasury secretary. Ms. Yellen has said
recently the recovery will be uneven and lackluster if Congress
doesn't spend more to fight unemployment and keep small businesses
One of Ms. Yellen's first decisions could be to potentially
reactivate a series of measures to backstop credit growth that the
Fed and Treasury launched this spring. Treasury Secretary Steven
Mnuchin decided last week that the programs would cease the
purchase of loans or assets at the end of the year, declining an
extension that had been sought by the Fed.
"She has clearly shown that she's willing to minimize the
downside risks to the economy," said Eric Barthalon, global head of
capital markets research at Allianz. "This is good news from a
markets' point of view."
A warning sign came in the latest survey of U.S. consumer
confidence. Consumers' views on the economic outlook soured in
November as coronavirus cases soared across the country, according
to the Conference Board.
Overseas, the pan-continental Stoxx Europe 600 rose 0.9% 392.39.
Among European equities, travel stocks rose after the U.K.
government said it would allow travelers to reduce the number of
quarantine days, starting Dec. 15, if they test negative for
Travel stocks rose in U.S. trading as well. American Airlines
Group, United Airlines Holdings, Southwest Airlines and Alaska Air
Group all rose more than 3%.
Write to Anna Hirtenstein at email@example.com and Paul
Vigna at firstname.lastname@example.org
(END) Dow Jones Newswires
November 24, 2020 16:50 ET (21:50 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.