Dow hits 30,000 for first time on Joe Biden transition and coronavirus vaccine hopes
- Investors reassured that the US can avoid a constitutional crisis over the handover of power from Trump
- Markets also cheered by news that Biden will tap ex-Fed chair Yellen as Treasury head, as well as upbeat AstraZeneca-Oxford vaccine results
The Dow surged past 30,000 points for the first time on Tuesday as receding US political uncertainty and hopes for coronavirus vaccines offset worries over spiking Covid-19 cases.
After crossing the threshold in mid-day trading, the blue-chip Dow Jones Industrial Average retreated a few times throughout the afternoon before closing at 30,046.24, up 1.5 per cent.
The broad-based S&P 500 gained 1.6 per cent to 3,635.41, also a record, while the tech-rich Nasdaq Composite Index advanced 1.3 per cent to 12,036.79.
Investors now feel more reassured that the US can avoid a constitutional crisis over the transition of power in the United States.
Outgoing President Donald Trump still has not conceded his election defeat, but on Monday night his administration authorised a transition, clearing the way for President-elect Joe Biden to have access to funds, office space and the ability to meet federal officials.
Investors have already been cheered by an upbeat coronavirus vaccine announcement by British drugs group AstraZeneca and the University of Oxford, as well as news that Biden will tap former Federal Reserve Chair Janet Yellen as treasury secretary.
Yellen “is a known and respected face on the international scene”, said a note from High Frequency Economics, adding that the former Fed chair is not known as a hardline critic of Wall Street.
Briefing.com analyst Patrick O’Hare recognised the latest Washington developments as “another excuse” for the market to rally in a holiday-shortened week, during a period when positive momentum is driving a “fear of missing out” trend.
That outlook is based on expectations that the US economy will pick up speed in 2021 as vaccines become further available and hard-hit sectors such as travel and energy begin to recover.
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Markets are looking past near-term weakness tied to surging coronavirus cases.
The Conference Board, a New York-based business research organisation, reported consumer confidence fell slightly more than expected in November to 96.1 from its upwardly revised 101.4 in October, driven mostly by worsening forecasts for the months ahead.
“Heading into 2021, consumers do not foresee the economy, nor the labour market, gaining strength,” senior director of economic indicators Lynn Franco said.
“In addition, the resurgence of Covid-19 is further increasing uncertainty and exacerbating concerns about the outlook.”