U.S. stock indexes rose on Tuesday as progress toward a massive government spending bill and COVID-19 relief measures kept spirits high, while investors awaited new economic cues from the Federal Reserve’s final meeting of the year.
Apple Inc was the top boost to the Dow and the Nasdaq, rising 4% to a more than three-month high after a report said it plans to increase iPhone production by 30% in the first half of 2021.
Talks in Congress were underway late on Monday to agree on a bill to avert a government shutdown, with Democrat and Republican leaders appearing more upbeat about including a fresh round of coronavirus aid, the first new relief measure since April.
Markets have moved in tandem with news on a relief bill, which is expected to further offset the economic impact of the virus outbreak and keep liquidity high.
But concerns over the timing of the bill, as well as a spike in the U.S. coronavirus death toll pushed the S&P 500 to a four-day losing streak on Monday, despite optimism over the launch of a nationwide vaccination program.
“There is a likelihood of some amount of stimulus to be passed, but investors are really hopeful of a stronger response to the current situation,” said Rick Meckler, partner at Cherry Lane Investments in New Jersey.
At 9:54 a.m. ET, the Dow Jones Industrial Average was up 133.99 points, or 0.45%, at 29,995.54, the S&P 500 was up 26.03 points, or 0.71%, at 3,673.52. The Nasdaq Composite was up 105.53 points, or 0.85%, at 12,545.57.
Technology stocks were the best performing S&P 500 sector in early trading.
Increased liquidity and ultra-low lending rates have seen investors flocking to stocks for returns through the COVID-19 pandemic, with the technology sector benefiting the most.
“The time-tested big tech names have shown their ability to weather the storm, even during some very tough times with the virus, so investors see them as names that can survive any potential shutdowns and still do well when things go back to normal,” Meckler added.
The Fed is expected to signal easy monetary policy for the foreseeable future in its two-day meeting starting Tuesday. The recent coronavirus vaccine roll-out is also expected to improve the central bank’s 2021 outlook.
Eli Lilly and Co rose 2.1% after the company said it would buy Prevail Therapeutics Inc in a deal potentially valued at $1.04 billion, to expand its presence in the lucrative field of gene therapy. Prevail’s shares surged about 83.0%.
Moderna Inc’s shares fell 3.2%, even as U.S. Food and Drug Administration staff members did not raise any new concerns over data on the drugmaker’s COVID-19 vaccine. A report said the vaccine will gain emergency use approval on Friday.
Advancing issues outnumbered decliners for a 2.51-to-1 ratio on the NYSE and a 1.67-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and two new lows, while the Nasdaq recorded 62 new highs and 10 new lows.
Reporting by Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta