Wall Street Close: Stocks rally into record high close on stimulus hopes
|- Major US equity bourses rallied into the close of US cash trade, each closing at record highs and SPX nearly surpassing 3700.
- A soft US labour market report was seen as boosting the chances of fiscal stimulus given, hence was taken as good news.
- President-elect Biden calls for stimulus and suggests any deal this year will be just the start.
The S&P 500, Dow Jones and Nasdaq Composite indices all posted record high closes, up 0.9%, 0.8% and 0.7% at just under 3700, 30,218 and 12,464 respectively.
Equity markets seem to have caught the scent of stimulus; Friday’s soft US labour market numbers appear to have been taken as increasing the chance that the US economy will soon be received stimulus from both fiscal and monetary policymakers. Indeed, US President-elect Joe Biden reiterated calls for more coronavirus aid and said that any stimulus bill passed this year would be just the start, whilst US Speaker of the House Nancy Pelosi spent the day jawboning about talks with Senate Majority Leader Mitch McConnell. Meanwhile, FOMC members reiterated the bank’s dovish stance, with rates likely to be held at zero for the foreseeable future, ahead of this month’s meeting on 16 December.
As a recap; the US economy added just 245K jobs in November according to the Bureau of Labour Statistics (BLS), and though the unemployment rate dropped to 6.7% from 6.9%, this was due to a decline in the participation rate to 61.5% from 61.7%. BLS said that 3.9M Americans were prevented from looking for work in November due to the pandemic, up from 3.6M in October.
Elsewhere, a key risk worth noting is that of the possibility of a US Government shutdown from 11 December. According to sources, there is a growing sense that a one-week stopgap bill (which would push back the start of the government shutdown by one week) might be necessary, something which market commentators have taken as a sign that talks on averting the government shutdown have not been going as quickly hoped. Should the end of next week arrive with still no deal on continued government funding, equity markets may have to stop ignoring this risk.
S&P 500 key levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.