Stocks Continue Ascent, Dow Hits Altitude of 30,000 for First Time…..
U.S. stocks continued to rally, taking the Dow north of the 30,000 mark for the first time as lingering COVID-19 vaccine optimism was met with some needed clarity on the political front. President-elect Joe Biden received the necessary resources from the federal government to assist in his transition, while the markets cheered media reports that former Fed Chairwoman Janet Yellen will likely be nominated as Treasury Secretary. The rotation into cyclically-natured and value stocks persisted, led by the Financials and Energy sectors. Best Buy and Dick’s Sporting Goods both topped Q3 expectations as digital sales surged, but held off on providing guidance, and J.M. Smucker raised its profit outlook. Meanwhile, Consumer Confidence and regional manufacturing activity both fell more than anticipated. Treasury yields were higher as bond prices declined, while the U.S. dollar decreased. Crude oil prices extended a recent rise and gold continued to see pressure. Europe and Asia both closed higher.
The Dow Jones Industrial Average rose 455 points (1.5%) to 30,046, the S&P 500 Index was up 58 points (1.6%) at 3,635, and the Nasdaq Composite increased 156 points (1.3%) to 12,037. In heavy volume, 1.2 billion shares were traded on the NYSE and 6.2 billion shares changed hands on the Nasdaq. WTI crude oil rallied $1.85 at $44.91 per barrel and wholesale gasoline added $0.05 to $1.25 per gallon. Elsewhere, the Bloomberg gold spot price fell $31.23 at $1,806.64 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.3% to 92.18.
Consumer Confidence and regional manufacturing reports miss expectations…..
The Conference Board’s Consumer Confidence Index declined more than expected to 96.1 from October’s upwardly-revised 101.4 level, and versus the Bloomberg consensus estimate calling for a decline to 98.0. The softer-than-expected read came as the Present Situation Index portion of the survey dipped but the Expectations Index of business conditions for the next six months fell noticeably. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—ticked further into positive territory, nudging up to 7.2 from the 7.1 level posted in October.
The Richmond Fed Manufacturing Activity Index declined more than expected but remained in expansion territory (a reading above zero) for this month. The index fell to 15 from October’s record high of 29, and versus forecasts calling for the figure to decline to 20.0. New orders, shipments and employment all declined but continued to depict growth.
Treasuries lost ground with the yield on the 2-year note little changed at 0.16%, while the yield on the 10-year note advanced 3 basis points (bps) to 0.88% and the 30-year bond rate gained 5 bps to 1.60%.
Bond yields have gained some momentum as of late, with the global markets reacting to progress on COVID-19 vaccines and economic data that has been mostly positive but showing signs of deceleration, though concerns remain regarding the implications of some reinstated restrictions on activity as virus cases surge in the U.S. and Europe.
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