The Dow Jones Industrial Average brushed off early losses to trade higher by 81 points, or 0.3%, near 29,502. The S&P 500 index advanced 32 points to reach 3,578, for a gain of 0.9%. The Nasdaq Composite Index jumped 228 points, or 2%, to trade near 11,781.
On Tuesday, the Dow rose 262.95 points, or 0.9%, to end at 29,420.92, near its previous all-time closing high of 29,551.42 set in mid-February. The S&P 500 fell 4.97 points, or 0.1%, to finish at 3,545.53, while the Nasdaq Composite slipped 159.93 points, or 1.4%, to close at 11,553.86. The small-cap Russell 2000 index rose 1.8%.
Technology giants were back in vogue Wednesday, pushing the Nasdaq Composite higher, as stay-at-home stocks once again outshined those of beaten down companies and industries by the pandemic.
“We’re back to the original trade,” said Anthony Denier, CEO of trading platform Webull, pointing to the boost in stay-at-home stocks on Wednesday, as well as enthusiasm around Apple Inc.’s new fleet of Macs with custom chips announced a day earlier as helping to lift the Nasdaq Composite higher.
He attributed the gains to the prospects of a divided U.S. government following last week’s election, which may not “have as big of a bite,” on technology companies in the form of additional regulation or higher taxes. “That takes that uncertainty out of the picture, for at least a couple of years,” he said.
Even so, the promise of a viable vaccine candidate for COVID-19 also has powered the Dow to near all-time highs, prompting some investors to rotate from large-capitalization and technology-related shares, more likely to prosper during lockdowns, to stocks that have been the most vulnerable to the social-distancing measures implemented to slow the coronavirus spread.
That rally, and the beginnings of a stock-market rotation, were sparked after Pfizer and BioNTech on Monday announced that their experimental vaccine showed a 90% efficacy in a Phase 3, or late-stage, study.
The pharmaceutical partners on Wednesday announced a deal to provide a supply of 200 million doses of its vaccine candidate to the European Union, marking the largest order for the potential vaccine to date.
Video: Wall Street points to a higher open following Tuesday’s mixed session (CNBC)
Also on Monday, Eli Lilly & Co.’s COVID-19 antibody treatment was approved for emergency use by the U.S. Food and Drug Administration.
Meanwhile, markets have greater clarity on the results of the U.S. presidential election, projected to have been won by former Vice President Joe Biden over incumbent Donald Trump, even as challenges to vote counts continue.
“I’m more bullish,” said Don Calcagni, chief investment officer for Mercer Advisors. “The market’s looking for three things. One, a peaceful transition of power. It looks like we have that, despite the theatrics, it looks like the election system in this country is very robust and works well. Number two, it’s looking to get past COVID. The Pfizer announcement was a huge step in that direction. And the market is also looking for a new relief package. It seems like both parties are aligned toward doing that.”
Goldman Sachs strategists, led by David Kostin, see the vaccine as a more important development for the economy and markets than the prospective policies of a Biden presidency. “The divisive U.S. presidential campaign was actually a backdrop to the main event: a public health crisis that has tragically claimed 240,000 lives in the U.S. since it began. However, within less than a year, a vaccine has been discovered,” they wrote.
Goldman boosted its year-end price target on the S&P 500 index to 3,700 from 3,600. The bank also forecasts 4,300 by the end of 2021 and 4,600 by the end of 2022.
To be sure, the pandemic currently has hit more people and surpassed its previous peak in the spring. The global tally for confirmed cases of COVID-19 cases climbed to 51.5 million Wednesday, according to data aggregated by Johns Hopkins University, while the death toll rose to 1.3 million.
The U.S. has the highest case tally in the world at 10.3 million and highest death toll at 239,695 or about a fifth of the global totals. The U.S. counted another 139,855 cases on Tuesday, and at least 1,448 people died, according to a New York Times tracker.
With the spread accelerating and political risk still a threat, some strategists worry that the stock buying enthusiasm earlier in the week may fade.
“We’ve all been predicting that rotation for a long time,” Mercer’s Calcagni told MarketWatch. But there are still a few hurdles to get past, he said, including the early January runoff elections for Georgia senators, which will determine whether Washington remains divided politically, a more favorable outcome for investors, in his view.
There are no U.S. economic reports on tap on Wednesday due to the government holiday.
The pan-European Stoxx 600 Europe Index jumped 1.1%, while London’s FTSE 100 was up 1.3%, even as European Central Bank chief Christine Lagarde urged patience over vaccine prospects.
The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, was 0.3% higher.
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Mark DeCambre contributed reporting