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Dow Jones Industrial Average Hits 30000 for the First Time

11/24/2020 | 04:00pm EST

By Anna Hirtenstein and Paul Vigna

The Dow Jones Industrial Average jumped past 30000 for the first time Tuesday, the latest milestone in a postelection rally turbocharged by promising results from three potential coronavirus vaccines.

The index of blue-chip companies gained more than 450 points in recent trading, or 1.5%, to push it to 30040. Earlier in the day, the Dow went above 30100, its highest intraday level in history.

The rise beyond 30000 underscores this year's remarkable journey for the Dow industrials. The blue-chip index flirted with 30000 in February, then dropped below 19000 in March as the coronavirus pandemic spread. The index has since soared, thanks, in part, to an improving economic landscape and low-interest rates that have boosted the appeal of riskier assets.

"Investors are showing faith in the idea of a recovery by mid-year 2021," said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management. Indexes like the Dow and Russell 2000, which include more cyclical companies closely tied to the strength of the economy, are plays on that recovery, he said.

President Trump, who often tweets about the rallying stock market, called the 30000 milestone a "sacred number" in a short press conference.

Tuesday's leg up came after Mr. Trump said his aides would cooperate with President-elect Joe Biden's transition to the White House, easing investors' concerns about a drawn-out period of uncertainty.

Investors are cheering signs that a protracted fight over control of the White House is potentially drawing to a close, reducing political risks over the winter months. The General Services Administration chief said Monday that her agency would provide Mr. Biden federal resources meant to assist in a smooth transfer of power. Mr. Trump also said he has instructed aides to help with the transition.

"This is very positive: it means that we finally might get an orderly transition process," said Luc Filip, head of private banking investments at SYZ Private Banking. "That would relieve some of the uncertainties that have been weighing on the market over the past two to three weeks."

The S&P 500 rose 1.6%, pointing to a second day of gains, while the Nasdaq Composite rose 1.3%.

The size of the rally since March, and just the fact of its continuation, has surprised even market veterans. If the S&P 500 finishes the year higher--it's up more than 12% now--it would be the first time the index fell 30% or more during a year and still finished that year higher, said Ryan Detrick, chief market strategist for LPL Financial. "Who in their right minds would've thought that in April?" he said.

Still, he cautioned against getting too excited, especially given the fervor with which investors are buying risk assets across the board. "Market sentiment is getting pretty excited, but the market has a funny way of not rewarding the masses," he said. A slowdown or pullback from these levels would be completely normal, he said.

Optimism also increased Monday after The Wall Street Journal reported that Mr. Biden plans to select former Federal Reserve Chairwoman Janet Yellen as Treasury secretary. Ms. Yellen has said recently the recovery will be uneven and lackluster if Congress doesn't spend more to fight unemployment and keep small businesses afloat.

One of Ms. Yellen's first decisions could be to potentially reactivate a series of measures to backstop credit growth that the Fed and Treasury launched this spring. Treasury Secretary Steven Mnuchin decided last week that the programs would cease the purchase of loans or assets at the end of the year, declining an extension that had been sought by the Fed.

"She has clearly shown that she's willing to minimize the downside risks to the economy," said Eric Barthalon, global head of capital markets research at Allianz. "This is good news from a markets' point of view."

The WSJ Dollar Index, which measures the greenback against a basket of currencies, declined 0.3%.

The digital currency bitcoin, meanwhile, traded as high as $19,417, close to its record high of $19,783 set in December 2017. It was lately up 3.9% at $19,089.

In bond markets, the yield on 10-year U.S. Treasury notes rose to 0.882%, from 0.857% on Monday.

Brent crude, the international benchmark for oil, rose to its highest since the turmoil in markets in the spring, ticking up 3.9% to $47.86 a barrel. U.S. crude oil rose 4.3% to $44.91.

"Oil demand rebound in 2021 is now a certainty, and markets are not waiting to price it in," said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB. "Add in the new stability from Biden, and it is again possible to make sensible predictions."

A warning sign came in the latest survey of U.S. consumer confidence. Consumers' views on the economic outlook soured in November as coronavirus cases soared across the country, according to the Conference Board.

If investors are looking through all this headline noise to an eventual recovery, Mr. Snyder said, then the current gains could run ahead of the fundamentals, in which case 2021 becomes a waiting game for investors. The most important factors will likely be where and how the different coronavirus vaccines get rolled out and how quickly they are administered.

"That will create volatility," he said.

Companies including Dell Technologies and retailers Gap and Nordstrom are scheduled to report earnings after markets close. Investors will be scrutinizing their results for further insights into businesses' ability to operate and their guidance for the coming months in light of the fresh limits on commercial activity around the world.

Overseas, the pan-continental Stoxx Europe 600 rose 0.9%. Among European equities, travel stocks rose after the U.K. government said it would allow travelers to reduce the number of quarantine days, starting Dec. 15, if they test negative for Covid-19.

Travel stocks rose in U.S. trading as well, with American Airlines, United Airlines Holdings, Southwest Airlines and Alaska Air Group climbing over 3%. Royal Caribbean Group gained 7.4%.

Most major Asian benchmarks edged up by the close of trading. Hong Kong's Hang Seng added 0.4% and Japan's Nikkei 225 jumped 2.5%, playing catch up after being closed Monday for a holiday. China's Shanghai Composite Index ticked down 0.3%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Paul Vigna at paul.vigna@wsj.com

(END) Dow Jones Newswires

11-24-20 1559ET

Stocks mentioned in the article
ChangeLast1st jan.
ALASKA AIR GROUP, INC. 2.01% 55.81 End-of-day quote.5.21%
ALLIANZ SE 0.40% 201.05 End-of-day quote.-0.22%
AMERICAN AIRLINES GROUP INC. 1.25% 16.17 End-of-day quote.2.54%
BITCOIN - EURO -8.85% 26776.55 End-of-day quote.26.41%
DELL TECHNOLOGIES INC. 2.93% 77.05 End-of-day quote.5.13%
DJ INDUSTRIAL 0.83% 31188.38 End-of-day quote.1.06%
EURO / US DOLLAR (EUR/USD) 0.17% 1.2136 End-of-day quote.-0.83%
HANG SENG -0.08% 29937.42 End-of-day quote.10.02%
LONDON BRENT OIL -0.02% 55.66 End-of-day quote.5.90%
LPL FINANCIAL HOLDINGS INC. -0.01% 119.55 End-of-day quote.14.71%
NASDAQ 100 2.31% 13296.45 End-of-day quote.0.84%
NASDAQ COMP. 1.97% 13457.2477 End-of-day quote.0.86%
NIKKEI 225 0.82% 28756.86 End-of-day quote.4.33%
NORDSTROM, INC -0.99% 35.88 End-of-day quote.14.96%
ROYAL CARIBBEAN CRUISES LTD -0.90% 72.82 End-of-day quote.-2.50%
S&P 500 1.39% 3851.85 End-of-day quote.2.55%
S&P/CITIC 300 INDEX 0.00% 4920.41 End-of-day quote.5.39%
S&P/CITIC 50 INDEX 0.00% 4920.34 End-of-day quote.3.98%
SOUTHWEST AIRLINES 2.77% 48.21 End-of-day quote.3.43%
STOXX EUROPE 600 0.51% 412.92 End-of-day quote.2.23%
UNITED CONTINENTAL HOLDINGS, INC. 0.96% 45.18 End-of-day quote.4.46%
WTI -0.06% 52.911 End-of-day quote.8.53%
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