Wall Street sets record closing highs as investors bet on stimulus

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Wall Street advanced on Monday, setting a course for record closing highs as stimulus prospects and ongoing vaccine deployment boosted investor optimism over the pace of economic recovery from the pandemic recession.

All three major US stock indexes were higher, with the S&P 500 and the Dow on track for their sixth consecutive gains, their longest winning streak since August. Small-caps, often seen as “re-opening plays,” outperformed their larger peers.

“The market is looking forward six months to a year and believing we’re going to be largely past the coronavirus issue and the economy will be reopened,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “That gives people conviction and reason to buy the market.

“The fear of not participating is having some folks throw in the towel despite worries that the market is overvalued and overbought,” he added.

Oil prices rose to their highest in over a year due to supply cuts and hopes for a stimulus-driven demand rebound, helping energy stocks jump 4.2 percent.

Treasury Secretary Janet Yellen said if Congress approves the president’s $1.9 trillion fiscal aid package, the United States could return to full employment next year.

That package came closer to passage on Friday when lawmakers approved a budget outline that would enable them to muscle it through Congress without Republican support.

Vaccine deployment pushes ahead in United States with at least 32,780,860 doses administered so far, and new infections trending lower, on average.

The Dow Jones Industrial Average rose 132.2 points, or 0.42 percent, to 31,280.44, the S&P 500 gained 13.29 points, or 0.34 percent, to 3,900.12 and the Nasdaq Composite added 69.19 points, or 0.5 percent, to 13,925.49.

Of the 11 major sectors in the S&P 500, six were green, with energy stocks enjoying the largest percentage gain.

Fourth-quarter reporting season has passed the halfway mark, with 294 of the companies in the S&P 500 having reported. Of those, 83 percent have beaten consensus estimates, according to Refinitiv.

Analysts see aggregate fourth-quarter S&P earnings posting a year-on-year gain of 2.4 percent, a stark reversal from the 10.3 percent annual decline seen at the beginning of the year, per Refinitiv.

Walt Disney, Cisco Systems and General Motors were up between 1.5 percent and 4.3 percent ahead of their earnings reports this week.

Bitcoin touched a record high after Tesla announced it had invested around $1.5 billion in the cryptocurrency and would begin accepting payment in bitcoin for its cars and other products.

“The average institutional investor is shaking their head,” Pavlik said. “For these folks who are believers in crypto currency, it gives them another layer of support that crypto is the future.”

Tesla shares inched up 0.6 percent, while cryptocurrency miners Riot Blockchain and Marathon Patent Group surged 33 percent and 35.1 percent, respectively.

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