Wall Street built on the November rally on Tuesday, with Nasdaq and the S&P 500 updating their record highs. Investor sentiment was lifted by the vaccine optimism and more confidence that a rapid economic recovery is possible.
All 11 of the S&P’s major sectors rose, with communication services leading the rally by gaining 2%.
The S&P 500 itself rose 1.13%, Nasdaq added 1.18%, and the Dow increased by 0.63%.
The share price of Pfizer surged almost 3% after the US pharma giant and its partner BioNTech applied for emergency approval of their COVID-19 vaccine candidate from the European regulator. Previously, Moderna did the same for its coronavirus vaccine that also relies on the mRNA technology, which has never been used before. The European Medicines Agency revealed that it could conclude its assessment of Pfizer and Moderna’s vaccines by December 29 and January 12, respectively.
Besides the vaccine optimism, investors welcomed the news about a new stimulus bill discussed in Congress. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin will restart negotiations over a new stimulus package proposed by members of both parties. The relief is worth $908 billion and includes support for small businesses, unemployed, and airlines, among others.
The stock rally was capped as US manufacturing activity slowed last month, as the number of COVID doubled in November. The Institute of Supply Management (ISM) said that manufacturing might recover after the coronavirus crisis ends.
In individual corporate news, Salesforce agreed to buy the business communication service Slack for $28 billion. The share price of both companies declined after the report. Salesforce presented Q3 results that beat analysts’ forecasts. The company also lifted its annual guidance.
Zoom Video Communications tumbled about 15% after warning its gross margins would maintain under pressure next year.
Tesla added 3% after S&P Dow Jones Indices announced it would add the $500+ billion giant to the S&P 500 index in a single step rather than in two phases.
In Asia, stocks are mixed in early trading on Wednesday, as the markets are gradually moving away from previous bearishness.
At the time of writing, China’s Shanghai Composite is down 0.03%, while the Shenzhen Component has gained 0.31% after initial losses. Tomorrow, Caixin will release its services PMI for China.
In Australia, the ASX 200 closed 0.03% higher after opening in the red. The Reserve Bank of Australia maintained the interest rate unchanged at 0.10%, in line with analysts’ expectations. Also, the Australian Bureau of Statistics said that the economy returned to growth in the three months to September. Australia’s GDP grew 3.3% from the second quarter, exceeding the 2.6% growth anticipated by the economists. In the second quarter, the economy contracted by 7%.
Japan’s Nikkei 225 has managed to close in the green, up 0.01%, after trading lower for most of the session. South Korea’s KOSPI is 1.56%.
Hong Kong’s Hang Seng Index declined by 0.17%. The city introduced fresh restrictions on Wednesday. Thus, most civil servants are working from home while the schools are closed until the end of the year. Also, seating in restaurants is limited to two people.
In the commodity market, oil prices maintained the bearish stance as OPEC+ delayed a meeting to decide the continuation of production cuts beyond January. The meeting was delayed from Tuesday to Thursday. Also, prices are under pressure as the American Petroleum Institute said that US crude supply rose by 4.1 million barrels last week, while analysts expected a draw of 2.4 million. WTI has lost 0.85% to $44.17, and Brent fell 0.76% to $47.06.
Gold is declining amid increased optimism over vaccines and a new stimulus package. Still, the metal managed to recover yesterday and break above $1,800. Gold futures are down 0.20% to $1,815.
In FX, the US dollar can’t attempt recovery as the risk appetite is lifted by the vaccine news and stimulus talks. The USD Index is down 0.14% to 91.168, close to the lowest level in two and a half years. EUR/USD is up 0.05% to break above 1.20 for the first time since April 2018.
AUD/USD is up 0.05% on Australia’s upbeat GDP data.
