U.S. Stocks Pull Back Off Best Levels But Close Modestly Higher
After an early move to the upside, stocks gave back some ground over the course of the trading session on Wednesday but managed to end the day modestly higher. With the uptick on the day, the Dow reached a new record closing high.
The Dow rose by nearly 190 points in morning trading but ended the session up just 73.89 points or 0.2 percent at 30,409.56. The Nasdaq edged up 19.78 points or 0.2 percent to 12,870.00 and the S&P 500 inched up 5.00 points or 0.1 percent to 3,732.04.
The early strength on Wall Street came as traders made another attempt at window dressing going into the end of the year after profit taking set in following an early advance on Tuesday.
News that U.K. regulators have approved a coronavirus vaccine developed by AstraZeneca (AZN) and the University of Oxford for emergency use also generated some positive sentiment.
Nonetheless, the upcoming New Year’s Day holiday on Friday kept overall trading activity relatively subdued.
Traders also kept an eye on developments in Washington, as lawmakers haggle over increasing stimulus checks to $2,000 from $600.
Senate Majority Leader Mitch McConnell, R-Ken., blocked Democratic efforts to fast-track a House approved measure to increase the size of the checks.
McConnell has instead proposed a bill that would tie the bigger stimulus checks to the repeal of a provision that protects social media platforms and the creation of an election fraud commission.
With Democrats likely to oppose the combined package, Senate Minority Leader Chuck Schumer, D-N.Y., described the move by McConnell as a “blatant attempt to deprive Americans of a $2,000 survival check.”
Political observers have suggested McConnell added the so-called “poison pill” to give cover to Georgia Senators seeking re-election in next week’s crucial run-offs.
On the U.S. economic front, the National Association of Realtors released a report showing a continued decrease in U.S. pending home sales in the month of November.
NAR said its pending home sales index slid 2.6 percent to 125.7 in November after falling by 0.9 percent to 129.1 in October. Economists had expected pending home sales to come in unchanged.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Meanwhile, a separate report from MNI Indicators showed an unexpected acceleration in the pace of growth in Chicago-area business activity in the month of December.
Gold stocks moved sharply higher over the course of the session, driving the NYSE Arca Gold Bugs Index up by 2.5 percent.
The rally by gold stocks came amid an increase by the price of the precious metal, with gold for February delivery climbing $10.50 to $1,893.40 an ounce.
An increase by the price of crude oil also contributed to significant strength among energy stocks. Crude for February delivery rose $0.40 to $48.40 a barrel after data showed a bigger than expected weekly drop in crude oil inventories.
Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index surged up by 2 percent, while the Philadelphia Oil Service Index and the NYSE Arca Oil Index jumped by 1.9 percent and 1.8 percent, respectively.
Considerable strength was also visible among airline stocks, resulting in a 1.9 percent advance by the NYSE Arca Airline Index.
Semiconductor, steel and chemical stocks also saw notable strength on the day, moving higher along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.5 percent, while China’s Shanghai Composite Index jumped by 1.1 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the U.K.’s FTSE 100 Index slid by 0.7 percent, the German DAX Index and the French CAC 40 Index dipped by 0.3 percent and 0.2 percent, respectively.
In the bond market, treasuries closed slightly higher after showing a lack of direction for much of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by nearly a basis point to 0.926 percent.
A report on weekly jobless claims may attract attention on Thursday, although trading activity is likely to remain light as some traders look to get a head start on New Year’s Eve celebrations.
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