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S&P 500 Sets Record Closing High After Rebounding From Early Weakness

wallstreet aug20 02dec20 lt

After coming under pressure early in the session, stocks showed a significant turnaround over the course of the trading day on Wednesday. The major averages all climbed well off their worst levels of the day, with the Dow and the S&P 500 closing in positive territory.

The major averages finished the day mixed, as the Nasdaq edged down 5.74 points or 0.1 percent to 12,349.37. The Dow rose 59.87 points or 0.2 percent to 29,883.79 and the S&P 500 inched up 6.56 points or 0.2 percent to a new record closing high of 3,669.01.

The early weakness on Wall Street came as some traders looked to cash in on yesterday's gains amid lingering concerns about the economic impact of the recent spike in new coronavirus cases.

Negative sentiment was also generated in reaction to a report from payroll processor ADP showing private sector employment in the U.S. increased by less than expected in the month of November.

ADP said private sector employment rose by 307,000 jobs in November after climbing by an upwardly revised 404,000 jobs in October.

Economists had expected employment to increase by 410,000 jobs compared to the addition of 365,000 jobs originally reported for the previous month.

"While November saw employment gains, the pace continues to slow," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

On Friday, the Labor Department is scheduled to release its more closely watched employment report, which includes both public and private sector jobs.

Selling pressure waned over the course of the morning, however, as traders remain optimistic about potential coronavirus vaccines.

The U.K. has approved the vaccine candidate developed by Pfizer (PFE) and BioNTech (BNTX), with the vaccine expected to be rolled out next week.

Traders also seem optimism lawmakers in Washington will reach an agreement on a new fiscal stimulus bill as both parties issue new proposals.

Sector News

Energy stocks turned in a strong performance on the day, benefiting from an increase by the price of crude oil. Crude for February delivery climbed $0.73 to $45.28 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index spiked by 3 percent, the Philadelphia Oil Service Index surged up by 2.7 percent and the NYSE Arca Natural Gas Index jumped by 2 percent.

Considerable strength also emerged among airline stocks, as reflected by the 2.2 percent gain posted by the NYSE Arca Airline Index. The index ended the session at its best closing level in nine months.

Banking, computer hardware and brokerage stocks also moved notably higher over the course of the trading session.

Meanwhile, substantial weakness remained visible among housing stocks, with the Philadelphia Housing Sector Index tumbling by 2.2 percent.

Software stocks also showed a significant move to the downside, dragging the Dow Jones U.S. Software Index down by 1.8 percent.

Salesforce (CRM) posted a steep loss after the cloud-based software company announced an agreement to acquire messaging platform Slack (WORK) for $27.7 billion.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region ended Wednesday's trading little changed. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index fell by 0.5 percent, the French CAC 40 Index closed just above the unchanged line and the U.K.'s FTSE 100 Index has jumped by 1.2 percent.

In the bond market, treasuries moved modestly lower, extending the sharp decline seen on Tuesday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.4 basis points to 0.948 percent.

Looking Ahead

Reports on weekly jobless claims and service sector activity may attract attention on Thursday, although trading may be somewhat subdued ahead of the monthly jobs report.

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