By Anna Hirtenstein and Paul Vigna
The Dow Jones Industrial Average jumped past 30000 for the first
time Tuesday, the latest milestone in a postelection rally
turbocharged by promising results from three potential coronavirus
vaccines.
The index of blue-chip companies gained more than 450 points in
recent trading, or 1.5%, to push it to 30040. Earlier in the day,
the Dow went above 30100, its highest intraday level in
history.
The rise beyond 30000 underscores this year's remarkable journey
for the Dow industrials. The blue-chip index flirted with 30000 in
February, then dropped below 19000 in March as the coronavirus
pandemic spread. The index has since soared, thanks, in part, to an
improving economic landscape and low-interest rates that have
boosted the appeal of riskier assets.
"Investors are showing faith in the idea of a recovery by
mid-year 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
press conference.
Tuesday's leg up came after Mr. Trump said his aides would
cooperate with President-elect Joe Biden's transition to the White
House, easing investors' concerns about a drawn-out period of
uncertainty.
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 rose 1.6%, pointing to a second day of gains,
while the Nasdaq Composite rose 1.3%.
The size of the rally since March, and just the fact of its
continuation, 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 said.
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,
he said.
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
afloat.
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."
The WSJ Dollar Index, which measures the greenback against a
basket of currencies, declined 0.3%.
The digital currency bitcoin, meanwhile, traded as high as
$19,417, close to its record high of $19,783 set in December 2017.
It was lately up 3.9% at $19,089.
In bond markets, the yield on 10-year U.S. Treasury notes rose
to 0.882%, from 0.857% on Monday.
Brent crude, the international benchmark for oil, rose to its
highest since the turmoil in markets in the spring, ticking up 3.9%
to $47.86 a barrel. U.S. crude oil rose 4.3% to $44.91.
"Oil demand rebound in 2021 is now a certainty, and markets are
not waiting to price it in," said Bjarne Schieldrop, chief
commodities analyst at Nordic bank SEB. "Add in the new stability
from Biden, and it is again possible to make sensible
predictions."
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.
If investors are looking through all this headline noise to an
eventual recovery, Mr. Snyder said, then the current gains could
run ahead of the fundamentals, in which case 2021 becomes a waiting
game for investors. The most important factors will likely be where
and how the different coronavirus vaccines get rolled out and how
quickly they are administered.
"That will create volatility," he said.
Companies including Dell Technologies and retailers Gap and
Nordstrom are scheduled to report earnings after markets close.
Investors will be scrutinizing their results for further insights
into businesses' ability to operate and their guidance for the
coming months in light of the fresh limits on commercial activity
around the world.
Overseas, the pan-continental Stoxx Europe 600 rose 0.9%. 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 Covid-19.
Travel stocks rose in U.S. trading as well, with American
Airlines, United Airlines Holdings, Southwest Airlines and Alaska
Air Group climbing over 3%. Royal Caribbean Group gained 7.4%.
Most major Asian benchmarks edged up by the close of trading.
Hong Kong's Hang Seng added 0.4% and Japan's Nikkei 225 jumped
2.5%, playing catch up after being closed Monday for a holiday.
China's Shanghai Composite Index ticked down 0.3%.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Paul
Vigna at paul.vigna@wsj.com
(END) Dow Jones Newswires
November 24, 2020 15:59 ET (20:59 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.