S&P 500 edges higher to record

US stocks continued to edge higher as traders shrug off the surge in Covid-19 cases around the world.

US stocks set new records in the final days of 2021. (Photo by Bryan R. Smith / AFP)

US stocks rose Wednesday in a choppy session exacerbated by thin trading volumes during the final days of the year.

The S&P 500 gained 0.1 per cent to another closing record after swinging between gains and losses earlier in the session. The Dow Jones Industrial Average added about 90 points, or 0.3 per cent, marking the blue-chip index’s sixth consecutive session of gains. The technology-heavy Nasdaq Composite finished 0.1 per cent lower.

Both the S&P 500 and the Dow closed at new records. Stocks are in the midst of what is known as the “Santa Claus rally,” or the period that includes the year’s last five trading days and the first two sessions of the new year. Since 1950, the S&P 500 has ended higher about 77 per cent of the time during the period, according to Dow Jones Market Data, with an average gain of 1.3 per cent.

Heading into the new year, investors said there are reasons for optimism, with many expecting a continued economic recovery ahead. Money-managers said they are also becoming more comfortable with the view that the Covid-19 Omicron variant may not lead to harsh restrictions on commerce and movement. State governors are implementing light-touch measures to try to avoid disruptions.

“There’s an element of positivity. The data continues to suggest that the disease itself caused by Omicron is materially less severe than the variants which have preceded it,” said James Athey, an investment manager at Abrdn. “That’s always been the endgame for the pandemic.” Investors’ subsiding fears over the Omicron variant have helped propel stocks higher in recent sessions. The S&P 500 is now up 1.6 per cent for the week and almost 28 per cent for the year.

Movements this week, however, have been exacerbated by lower-than-average trading volumes due to the holiday season. Trading volumes reached the lowest level all year on Tuesday, according to a composite metric that includes the New York Stock Exchange and the Nasdaq. Investors said some of the choppiness this week has also likely been driven by portfolio repositioning.

“Institutions and individuals are trying to get ahead of the year-end mark,” said Jason Pride, chief investment officer for private wealth at Glenmede.

Among the S&P 500’s 11 sectors, only the energy and communication services sectors fell in afternoon trading Wednesday. But technology and travel stocks also struggled. Chip-maker Advanced Micro Devices and American Airlines Group posted among the biggest declines in the S&P 500, with losses of 3.5 per cent and 2.8 per cent, respectively.

Apple added 0.2 per cent and recently traded at $US179.61. Investors have been keeping a close watch on the tech behemoth’s trading as it edges closer to becoming the first company to close above a $3 trillion market capitalisation. Apple would need to close above $US182.856 to reach the milestone.

Tesla gained 0.1 per cent. Chief Executive Elon Musk exercised the final batch of a package of vested stock options, a series of transactions that have boosted his stake in the company.

In bonds markets, the yield on the benchmark 10-year US Treasury note rose to 1.542 per cent from 1.48 per cent on Tuesday. That marked its highest yield since November 24. Yields move inversely to bond prices.

Oil prices rose. Global benchmark Brent crude rose 0.4 per cent to $US79.23 a barrel. Bitcoin wavered, and recently added about 0.1 per cent compared with its level at 5pm. ET on Tuesday. It recently traded around $US47,608, according to CoinDesk, after declining the most in nearly a month the previous day. Shares of cryptocurrency exchange Coinbase slid 3.3 per cent.

Overseas, the pan-continental Stoxx Europe 600 fell 0.1 per cent. The FTSE 100 advanced 0.7 per cent on the first day of trading this week after UK markets were closed for bank holidays.

The Turkish lira weakened for the third consecutive day, depreciating 6.8 per cent against the dollar and trading at about 12.7 lira to $US1. The currency had strengthened following an economic rescue plan put forward by President Recep Tayyip Erdogan last week.

In Asia, most major benchmarks slid. The Shanghai Composite Index retreated 0.9 per cent and Japan’s Nikkei 225 closed down 0.6 per cent. Hong Kong’s Hang Seng index fell 0.8 per cent, led by declines in technology stocks.

The Wall Street Journal