NEW YORK -U.S. stocks closed higher on Wednesday as investors looked towards an improving economic outlook in 2021 on the back of COVID-19 vaccine rollouts and hopes for even more fiscal support.
Near-term expectations of bigger stimulus checks dimmed after Senate Majority Leader Mitch McConnell blocked a quick vote to back President Donald Trump's call to increase COVID-19 relief checks to US$2,000 from US$600 already signed into law. McConnell introduced a bill that tied the increased US$2,000 stimulus checks with the removal of protections for social media companies and a study on election security.
"Something's better than nothing but there's a lot of politics involved. The market is anticipating something, whether US$600 or US$2,000 part of that is baked into the cake," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
"The markets are saying 'what have you done for me lately?' and people are going to be focusing on what's going to happen if we see more and more restrictions due to the pandemic."
Investors are also eyeing the Georgia run-off election on January 5, which could lead to Democratic control of the Senate, and upend the market view of political gridlock.
Optimism over vaccine rollouts was boosted after Britain approved the emergency use of AstraZeneca and Oxford University's COVID-19 vaccine, which will start being administered on Monday.
But that was tempered somewhat by the first known U.S. case of a highly infectious coronavirus variant discovered in Britain that was now detected in Colorado.
Unofficially, the Dow Jones Industrial Average rose 73.89 points, or 0.24per cent, to 30,409.56, the S&P 500 gained 5 points, or 0.13per cent, to 3,732.04 and the Nasdaq Composite added 19.78 points, or 0.15per cent, to 12,870.00. The last few weeks of the year have seen a shift towards undervalued stocks that historically are the first to benefit from an economic recovery, with sectors such as banking, energy and materials outpacing their peers.
Heavyweight technology shares, the most sought-after this year, weakened as investors rushed towards cyclical stocks.
Trading volumes were subdued and are expected to be low as the year draws to close.
The S&P 500 index is up nearly 16per cent on the year, after trillions of dollar in fiscal and monetary stimulus and progress in developing vaccines helped the benchmark index bounce back more than 66per cent from its March 23 closing low.
The tech-heavy Nasdaq, which was the first among Wall Street's main indexes to turn positive for the year, is also set for its best yearly performance since 2009, with majority of gains led by FAANG stocks - Apple Inc, Facebook Inc, Amazon.com Inc, Netflix Inc and Alphabet Inc.
Despite the modest gains, nearly all of the 11 major S&P sectors were higher, with energy and materials the best performing.
Shares of payments network processor Mastercard Inc rose after Stephens hiked its price target on the stock on hopes of improving cross-border sentiment.
(Additional reporting by Stephen Culp; editing by Diane Craft)