Stocks notched broad gains on Wall Street Tuesday as renewed optimism that Washington will deliver more aid to the struggling economy put investors in a buying mood.
The S&P 500 climbed 1.3%, snapping a four-day losing streak. Technology companies powered much of the rally, which helped push the tech-heavy Nasdaq composite to an all-time high. An index of small-company stocks also set a record high. Treasury yields rose.
Negotiations between Democrats and Republicans on another round of coronavirus relief have been dragging on for weeks. Fresh signs of cooperation Tuesday appeared to boost the market’s confidence that Washington can get past its partisan divide and hammer out a deal. A bipartisan group of lawmakers unveiled a detailed proposal. Meanwhile, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin held another round of talks.
“The most important thing is this idea of a fiscal stimulus package actually seeing some positive chance of being approved,” said Tom Martin, senior portfolio manager with Globalt Investments.
Also helping to steady the market were hopes for an improving economy next year as COVID-19 vaccines become widely distributed. A vaccine candidate developed by Moderna and the National Institutes of Health may be on the cusp of regulatory approval after the Food and Drug Administration said its preliminary analysis confirmed its safety and effectiveness. It would join the nation’s first vaccine, which just began rolling out. Hundreds of hospital and health care facilities will get their first shipments Tuesday of the vaccine developed by Pfizer and BioNTech.
The S&P 500 rose 47.13 points to 3,694.62. The Dow Jones Industrial Average gained 337.76 points, or 1.1%, to 30,199.31. The Nasdaq climbed 155.02 points, or 1.3%, to 12,595.06. That eclipsed the index’s last all-time high set a week ago.
About 90% of the companies in the benchmark S&P 500 notched gains, led by technology, financial and health care stocks.
Small-company stocks did especially well, a sign that investors are feeling more optimistic about prospects for the economy. The Russell 2000 index picked up 45.91 points, or 2.4%, to 1,959.76, a record high.
The Russell 2000 trailed the broader market for most of this year as investors bet that larger companies, especially Big Tech stocks, would be better suited to weather the economic fallout from the pandemic. Now it’s up 17.5% for the year, while the S&P 500 is up 13.4%.
“Nobody wanted to reverse that trade until you started to be able to see the light at the end of the tunnel, and that happened when we started getting some real vaccine news that was positive,” Martin said.
Another big gain for Apple also helped to lift Wall Street. It’s the most influential stock in the S&P 500 because of the company’s massive market value, and it rose 5% after a report from Japan’s Nikkei said it may produce more iPhones in the first half of 2021 than analysts had been expecting.
Much of the market’s focus remains on Washington, though, where a deep partisan divide has kept Congress from delivering another dose of financial support for the economy. Economists and investors have been clamoring for more aid for jobless workers and hard-hit industries, among other things, particularly as surging coronavirus counts pummel the economy again.
The number of U.S. workers applying for unemployment benefits is back on the rise, as governments around the country and world bring back varying degrees of restrictions on businesses. Even without lockdown orders, the fear is that the rising number of deaths will keep customers away from businesses.
Another round of financial support from Washington could help carry the economy through what’s expected to be a bleak winter, before vaccines help things get closer to normal next year.
Worries about the worsening pandemic and stop-and-start talks in Washington about support for the economy have made the market shaky in recent weeks. It earlier surged through November on hopes for coming COVID-19 vaccines and relief that the U.S. presidential election ended with a clear winner, Democrat Joe Biden. The electoral college confirmed Biden’s victory on Monday.
Still, the S&P 500 remains near its record set a week ago. Massive efforts by the Federal Reserve have provided another huge underpinning, and the central bank begins its last policy meeting of the year on Tuesday. It will announce its decision on Wednesday after already cutting short-term interest rates to nearly zero and indicating it will keep them there for a while even if inflation rises above its target of 2%.
European markets mostly rose, while Asian markets ended mostly lower.
The yield on the 10-year Treasury rose to 0.91% from 0.88% late Monday.
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