Stocks Head Toward Final Trading Day of 2020 with Gains…..
U.S. equities finished the second-to-last trading session of 2020 on a high note amid subdued worldwide trading volume. Worries surrounding the rise in COVID-19 cases in areas around the world were tempered by further progress on the vaccine front, with Britain becoming the first country to approve for emergency use AstraZeneca/Oxford’s vaccine. The economic calendar saw its busiest day of the week with mixed reads, headlined by an unexpected acceleration in manufacturing growth out the Chicago region in December and a decline in pending home sales. The recently passed fiscal relief bill and massive amounts of global central bank support continued to keep sentiment buoyed, but some of the glimmer appeared to fade after a push to increase household payments to $2,000 was blocked in the Senate yesterday. In M&A news, McCormick & Company agreed to acquire privately-held clean and natural flavors manufacturer FONA International LLC for $710 million in cash. Treasuries were little changed and the U.S. dollar continued to drop to levels not seen in over two years, while gold and crude oil prices were higher. Stocks in Europe lost steam late in the day to finish mostly lower, while markets in Asia were mixed.
The Dow Jones Industrial Average rose 74 points (0.2%) to 30,410, the S&P 500 Index was up 5 points (0.1%) at 3,732, and the Nasdaq Composite increased 20 points (0.2%) to 12,870. In moderate volume, 691 million shares were traded on the NYSE and 5.2 billion shares changed hands on the Nasdaq. WTI crude oil was $0.40 higher at $48.40 per barrel and wholesale gasoline was up $0.02 at $1.40 per gallon. Elsewhere, the Bloomberg gold spot price gained $13.99 to $1,892.17 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.4% to 89.64.
Progress on the COVID-19 vaccine front continued as Britain became the first country to approve for emergency use AstraZeneca PLC’s vaccine that it developed with the University of Oxford. Shots will begin on Monday, prioritized for the country’s most vulnerable, helping boost vaccinations in the region that has seen COVID-19 continue to surge, including a new variant that has also been found in the U.S. for the first time. AZN traded higher.
Chicago region manufacturing growth unexpectedly accelerates, trade deficit widens…..
The Chicago PMI surprisingly moved further into a level depicting expansion (a reading above 50). The index rose to 59.5 in December from November’s 58.2 level, and versus the Bloomberg consensus estimate calling for a decline to 56.3. Growth in new orders decelerated but production expanded at a faster pace and the contraction in employment decelerated.
Pending home sales unexpectedly fell, dropping 2.6% month-over-month in November, versus estimates calling for a flat reading after October’s 0.9% decline. Sales were 16.0% higher year-over-year (y/y), compared to October’s 19.7% increase. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.
The advance goods-trade balance showed that the November deficit widened by a larger amount than expected, coming in at $84.8 billion, versus estimates calling for it to increase to $81.5 billion from October’s unadjusted shortfall of $80.3 billion.
Preliminary wholesale inventories surprisingly dipped 0.1% m/m for November, compared to expectations of a 0.6% gain, and versus October’s upwardly-revised 1.2% rise.
Treasuries were little changed, as the yields on the 2-year and 10-year notes were flat at 0.13% and 0.94%, respectively, while the 30-year bond rate ticked 1 basis point (bp) lower to 1.67%. The U.S. Dollar Index continued its fall to levels not seen since the Spring of 2018.
©2020 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.
Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.