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Stocks Climb to Fresh Records as Investors Bet on Stimulus

12/04/2020 | 04:18pm EST

By Karen Langley, Caitlin Ostroff and Frances Yoon

U.S. stock indexes ended Friday at records as this week's revival of stimulus negotiations bolstered expectations that the economy can weather the pandemic's continued spread.

The Dow Jones Industrial Average gained 248 points, or 0.8%, to 30217, a record and its second close over 30000. The S&P 500 rose 0.9% to 3699, its own fresh record. The tech-heavy Nasdaq Composite added 0.7% and also closed at a new high. All three indexes gained at least 1% for the week.

Investors have watched closely in recent days as momentum grows in Washington for a new coronavirus aid package. A sharp decline in job growth in November added to the sense of urgency, with members of both parties pointing to Friday's jobs report as impetus for swift action.

"You are still looking at an economy that is in pain," said Amy Kong, chief investment officer at Barrett Asset Management. "You want to make sure that the household income is continuing on, or the momentum is there, because I believe once household income gets to a level where it impacts confidence, it's going to be hard to get folks to spend again."

U.S. consumers boosted spending in October for a sixth straight month, but recent survey data suggests their views of the economic outlook dimmed in November. Consumer spending accounts for more than two-thirds of U.S. economic activity.

The November jobs report showed employers added 245,000 jobs last month, less than half the 610,000 jobs added in October and below economists' expectations. The unemployment rate edged down to 6.7% from 6.9% in October, partly because fewer Americans were looking for work.

"The jobs report's important," said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management. "But it just kind of confirms what we're seeing, which is there's only so much recovery we're going to see until we can get the economy fully reopened."

Newly reported Covid-19 cases in the U.S. hit a record high Thursday, as did deaths reported in a day, as the global death toll from the coronavirus pandemic passed 1.5 million. Hospitalizations also hit a record, with 100,667 people in the U.S. admitted as of Thursday, according to the Covid Tracking Project.

Stocks have posted modest gains this week, after rallying last month as investors cheered progress toward Covid-19 vaccines that could help accelerate the economic recovery. The S&P 500 is up 1.4% for the week, while the Dow industrials are on pace for a 0.8% weekly gain. The Russell 2000 small-cap index is on course to rise 1.4% this week.

"The market is now pausing a little bit, but the underlying story is still intact -- that there is basically a global recovery," said Luca Paolini, chief strategist at Pictet Asset Management. "It is difficult to see what can change this kind of positive outlook for equities."

Among individual stocks, shares of DocuSign gained 5% after the company provided guidance that topped analysts' expectations. Ulta Beauty shares declined 4% after its chief executive said the company is expecting fourth-quarter comparable-store sales to fall between 12% and 14%.

In bond markets, the yield on the 10-year U.S. Treasury note rose to 0.964%, from 0.919% on Thursday.

Brent crude, the global benchmark for oil markets, climbed 1% to $49.18 a barrel after OPEC and a group of Russia-led oil producers agreed to increase their collective output by 500,000 barrels a day next month.

The world's biggest producers are betting that the worst of a pandemic-inspired shock to demand is behind them after curtailed travel weighed heavily on oil prices this year.

Overseas, the pan-continental Stoxx Europe 600 rose 0.6%. The Nikkei declined 0.2%. The Shanghai Composite was flat.

In Hong Kong, shares of China National Offshore Oil and Semiconductor Manufacturing International dropped over 2% after the U.S. Defense Department added the state oil giant and chip maker to a list of nearly three dozen companies the U.S. says helps the country's military. Overall, the Hang Seng Index rose 0.4%.

The blacklist, which the U.S. launched last month, has hit stocks and bonds of the targeted Chinese companies. Index compilers FTSE Russell, JPMorgan and MSCI are rethinking their stance on these securities targeted by the U.S. government and have been collecting investor feedback.

Write to Karen Langley at karen.langley@wsj.com, Caitlin Ostroff at caitlin.ostroff@wsj.com and Frances Yoon at frances.yoon@wsj.com

(END) Dow Jones Newswires

12-04-20 1617ET

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.57% 30996.98 Delayed Quote.1.86%
HANG SENG -1.66% 29441.63 Real-time Quote.8.12%
NASDAQ 100 -0.29% 13366.396971 Delayed Quote.4.01%
NASDAQ COMP. 0.09% 13543.061633 Delayed Quote.4.41%
NIKKEI 225 -0.44% 28631.45 Real-time Quote.4.78%
S&P 500 -0.30% 3841.47 Delayed Quote.2.27%
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