Dow Jones Industrial Average hits 30,000 for the first time

The Dow rises above 30,000 for the first time in a post-election rally turbocharged by promising vaccine results.

Wall Street stocks jumped past 30,000 for the first time, the latest milestone in a postelection rally.

The Dow Jones Industrial Average closed above 30,000 for the first time, the latest milestone in a postelection rally turbocharged by promising results from three potential coronavirus vaccines.

The index of blue-chip companies gained around 450 points, or 1.5%, to close at 30,046.

Earlier in the day, the Dow went above 30,100, its highest intraday level in history.

The rise beyond 30,000 underscores this year’s remarkable journey for the Dow industrials. The blue-chip index flirted with 30,000 in February, then dropped below 19,000 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 closed up 1.6%, while the Nasdaq Composite rose 1.3%.

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, rose 4.5% to $US19,209, closing in on its record high of $US19,783 set in December 2017.

In bond markets, the yield on 10-year US Treasury notes edged up to 0.873%, 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 3.7% to $47.74 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 scrutinising 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 US trading as well, with American Airlines, United Airlines Holdings, Southwest Airlines and Alaska Air Group climbing over 3%. Royal Caribbean Group gained 6.9%.

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%.

The Wall Street Journal