NEW YORK, Dec 29 — US stocks rallied yesterday, with each of Wall Street's main indexes closing at record levels as President Donald Trump's signing of a long-awaited US$2.3 trillion (RM9.33 trillion) pandemic aid bill increased optimism for an economic recovery.
In a sudden reversal late on Sunday, Trump backed down from his threat to block the hard-fought bill, restoring unemployment benefits to millions of Americans and averting a federal government shutdown.
“It's a positive tone to the US market and part of that is the signing of stimulus package by Trump, which appeared to be in doubt but is finally been accomplished,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“We still have a follow-on to the Christmas rally and the favorable market we've had for a while here,” he added.
The Dow Jones Industrial Average rose 204.1 points, or 0.68 per cent, to 30,403.97, the S&P 500 gained 32.3 points, or 0.87 per cent, to 3,735.36 and the Nasdaq Composite added 94.69 points, or 0.74 per cent, to 12,899.42.
Stocks battered by coronavirus lockdowns, such as airlines and cruise lines, advanced. The S&P 1500 airlines index gained 0.9 per cent as carriers are set to receive US$15 billion in addition payroll assistance under the new government aid.
Cruise operators Royal Caribbean Cruises Ltd, Carnival Corp and Norwegian Cruise Line Holdings Ltd each rose by at least 3 per cent.
On a sector basis, gains were led by communication services , consumer discretionary and tech as each climbed more than 1 per cent.
After a sharp recovery from a coronavirus crash in March, the S&P 500 is on track to rise more than 15 per cent this year on the back of a loose monetary policy and a Covid-19 vaccine programme that has raised hopes the economic environment will improve.
Despite the generally favourable conditions for equities, worries over a resurgence in coronavirus cases, upcoming US Senate runoffs in Georgia and stretched valuations could become headwinds. The forward price-to-earnings ratio of the S&P is currently about 22.2, well above its long-term average of 15.3.
Trading volumes are expected to be thin in the final week of the year that has historically been a seasonally strong period for equities.
Democrats in the US Congress yesterday will put to vote a proposal for higher pandemic relief payments for Americans, although it appears unlikely to gain traction in the Republican-controlled Senate.
Adding to a global appetite for risk, Britain and the European Union clinched a lean post-Brexit trade deal on Thursday, while a mass Covid-19 vaccination drive in Europe was launched over the weekend.
Tesla Inc edged up 0.3 per cent after a report that the electric-car maker will start operations in India early next year.
Lockheed Martin Corp advanced 0.6 per cent after the fighter jet maker said it delivered 123 F-35 jets in 2020, near the top end of its revised outlook.
Volume on US exchanges was 9.93 billion shares, compared with the 11.45 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 1.21-to-1 ratio; on Nasdaq, a 1.10-to-1 ratio favoured advancers.
The S&P 500 posted 35 new 52-week highs and 1 new low; the Nasdaq Composite recorded 242 new highs and 17 new lows. — Reuters
