Wall Street shares surged to a higher close, entering the last quarter of 2021 in a buying mood fueled by positive economic data, progress in the fight against COVID, and Washington’s developments on potential adoption of a bill on infrastructure.
The three major US equity indices hovered earlier in the session, but started to rise in the late afternoon, led by cyclical economy-sensitive stocks.
The rally gathered momentum after the White House announced that US President Joe Biden was getting more involved in negotiations on the infrastructure spending bill being debated on Capitol Hill.
Despite this, all three indices finished below last Friday’s close, falling between 1.4% and 3.2%, with the S&P 500 and Nasdaq Composite recording their biggest weekly percentage declines since February.
“There was a widespread recovery today. Markets weren’t obsessed with new taxes or a cut today,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York City.
âCompared to the past few weeks, there has been no big news from Washington, so markets have been forced to focus on positive economic data and a new COVID drug.â
Merck & Co Inc found that a recent study showed its investigational oral drug for COVID-19 reduced the risk of death and hospitalization by about 50%, bouncing its shares 8.4% and boosting sentiment of economic reopening.
While Biden enacted a draft bill to keep the government in place until Dec. 3, lawmakers were only successful in kicking the box.
This lack of resolution prompted the rating agency Fitch to warn that the United States’ “AAA” credit rating could be threatened.
âThe markets don’t think the debt will be downgraded or that a debt ceiling deal will not be reached, but it adds further uncertainty which is always a problem for the markets,â added Carter.
A host of economic data released on Friday showed increased consumer spending, accelerating factory activity and high inflation growth, which could help the US Federal Reserve shorten its schedule to tighten its policy. accommodative monetary policy.
Philadelphia Fed Chairman Patrick Harker reiterated his point of view expressed in a speech Wednesday that he believed the central bank should start cutting asset purchases “soon” but reiterated that he would not. did not expect it to raise its key interest rates before the end of next year or early 2023..
The Dow Jones Industrial Average rose 482.54 points, or 1.43%, to 34,326.46; the S&P 500 gained 49.5 points, or 1.15%, to 4,357.04; and the Nasdaq Composite added 118.12 points, or 0.82%, to 14,566.70.
Of the top 11 sectors in the S&P 500, all except health care stocks ended higher.
The sector was weighed down by an 11.4% drop in shares of COVID vaccine maker Moderna Inc following Merck’s announcement.
Economic optimism prompted value stocks to outperform growth, and transportation and small caps to fare better than the broader market.
The advancing issues outnumbered the declines on the NYSE by a ratio of 2.17 to 1; on the Nasdaq, a ratio of 1.63 to 1 favored the advances.
The S&P 500 posted 10 new 52-week highs and nine new lows; the Nasdaq Composite recorded 63 new highs and 136 new lows.
The volume on the US stock exchanges was 11.02 billion shares, compared to an average of 10.70 billion over the last 20 trading days.