U.S. Stocks Wrap Up Shortened Session and Week Higher…..

U.S. stocks closed higher to end an abbreviated trading session and also extended a solid rally to close out the holiday shortened week. The markets’ grind higher was supported by the clarity offered from President-elect Joe Biden’s administration taking shape, and even more so by the optimism surrounding multiple potentially effective COVID-19 vaccines. Economic and equity news was light. Treasury yields dipped as bond prices ticked higher, and the U.S. dollar slipped. Gold dropped and crude oil prices were mixed but still notched a fourth-straight weekly gain. Asia finished mixed, though China rallied on a stronger-than-expected read on industrial profits, and Europe was higher as the U.S. markets came back on line.

The Dow Jones Industrial Average rose 38 points (0.1%) to 29,910, the S&P 500 Index was up 9 points (0.2%) at 3,638, and the Nasdaq Composite advanced 111 points (0.9%) to 12,206. In light volume, 530 million shares were traded on the NYSE and 3.3 billion shares changed hands on the Nasdaq. WTI crude oil was $0.26 lower at $45.45 per barrel and wholesale gasoline lost $0.01 to $1.26 per gallon. Elsewhere, the Bloomberg gold spot price fell $27.74 to $1,788.06 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—decreased 0.2% to 91.80. Markets were up for the week, as the DJIA and the S&P 500 advanced 2.2%, and the Nasdaq Composite increased 3.0%.

U.S. stocks extended a weekly gain that saw a return to record highs for the markets, including the Dow breaching the 30,000 mark for the first time. Much needed clarity on President-elect Joe Biden’s administration, along with persistent optimism regarding the distribution of the multiple potential effective COVID-19 vaccines have fueled the rally. These factors also helped the markets stomach the likelihood of further disruption in near-term economic activity as the resurgence of new virus cases in the world’s largest economy of the U.S. and in Europe has prompted the reinstatement of some restrictions on activity.

As such, the market leadership has showed signs of rotation into stocks that are economically-sensitive and have underperformed during the stay-at-home standard of living that the pandemic ushered in. For the week, Energy and Financials have noticeably rallied to lead the way, followed by Consumer Discretionary, Industrials and Materials issues.

Treasuries were higher as the yield on the 2-year note ticked 1 basis point (bp) lower to 0.15%, the yield on the 10-year note decreased 4 bps to 0.84%, and the yield on the 30-year bond declined 5 bps to 1.58%.

This week bond yields have nudged higher as the vaccine optimism and political clarity has bolstered expectations for a potentially faster economic recovery in 2021, while a host of economic data has remained positive, but showed some signs of deceleration.

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