By Damian J. Troise and Alex Veiga
Technology and health care companies helped drive stocks to more gains Tuesday, leading to more milestones on Wall Street.
The S&P 500 index rose 0.3%, eclipsing the all-time high it set on Friday. The Nasdaq composite and Russell 2000 index of small company stocks also set record highs. The likelihood that one or more coronavirus vaccines could begin to be distributed in the U.S. in coming weeks has kept investors in a buying mood, boosting their optimism for an economic recovery next year.
The gains, which came after a shaky start for the market, came as the U.K. became the first Western country to start a mass vaccination program. On Tuesday, U.S. health regulators issued a positive initial review of that vaccine and a decision to allow its use is expected within days, though wide distribution is likely months away.
“The vaccine news and the focus on that is the most important thing for the market at the moment,” said Stephanie Roth, portfolio macro analyst, J.P. Morgan Private Bank. “At this point, the excitement is for the post-vaccine world.”
The S&P 500 rose 10.29 points to 3,702.25. The index had one of its best months in decades during November and is already up 2.2% so far this month. The Dow Jones Industrial Average gained 104.09 points, or 0.4%, to 30,173.88. The tech-heavy Nasdaq picked up 62.83 points, or 0.5%, to 12,582.77, marking its fourth straight record high.
Small-company stocks rose much more than the rest of the market, a signal that investors are feeling more optimistic about the economy. The Russell 2000 index climbed 26.53 points, or 1.4%, to 1,917.78.
Nearly 60% of the companies in the benchmark S&P 500 closed higher, with energy stocks notching the biggest gain. Stocks had been down in the early going on worries about rising coronavirus cases, but turned higher around midday. Traders are looking ahead to Thursday, when U.S. regulators will meet to determine whether to green-light the distribution of a COVID-19 vaccine developed by U.S. drugmaker Pfizer and Germany’s BioNTech.
The need for a vaccine has been heightened in recent weeks as the coronavirus has been surging across much of the world. The virus has claimed more than 1.5 million lives, including over 284,000 in the U.S., the highest toll of any country. Governments worldwide have been tightening restrictions on businesses in an effort to stem the latest surge in cases, stoking worries about the potential economic fallout.
That's kept investors focused on Washington and the prospects for another round of aid for Americans and business hit hardest by the pandemic. Congress is still stuck in a partisan stalemate over the size and scope of any additional aid to help cushion the financial impact to people and businesses. The economy has been showing signs of a stalled recovery as the virus surge broadens nationally, including slower job growth in the U.S. last month.
Big Tech stocks that have been big winners during the pandemic helped power the rally Tuesday. Apple rose 0.5% and Microsoft gained 0.8%.
Health care stocks made solid gains. Pfizer rose 3.2% and Johnson & Johnson rose 1.7%. Exxon Mobil was among the big gainers in the energy sector, climbing 3.3%.
Shop-from-home clothing seller Stitch Fix soared 39.2% after reporting a surprise profit in its latest quarter. Etsy jumped 4.5%.
A mix of companies that rely on direct consumer spending and those that would greatly benefit from a fuller economic recovery continued to see a bit of churn. The moves reflect the constant push-and-pull of hope for an eventual economic recovery pitted against the continued economic damage inflicted by the pandemic.
Cruise line operators gained ground, including a 6.2% rise from Norwegian Cruise Line. The sector very much needs the virus to recede in order to get back to normal operations. Other companies that need a more normal economy in order to recover are still slipping. Darden Restaurants, which operates Olive Garden, fell 0.4%.
Overall, many of the companies that have been beaten down have been doing better as investors see an eventual end to the pandemic. There's been a push for broader investments in many of those industries and not much pullback, said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management.
“It’s a very positive sign when you see very broad participation,” he said. “It tells me positioning is still in the process of moving more into cyclical stocks.”
The yield on the 10-year Treasury rose to 0.92% from 0.91% late Monday.
European markets closed mixed and Asian markets fell.
Updated on December 8, 2020, at 5:02 p.m. ET.
