Wall Street closed higher on continued hopes for fiscal stimulus after a new $748 billion relief package came to the forefront — and more in Tuesday’s stock market update.
This relief package excluded controversial aid to states and liability protection. There was also speculation there will be continued quantitative easing as the Federal Open Market Committee kicked off its two-day meeting with an update due Wednesday afternoon.
The Russell 2000 surged 2.4% after testing a fresh all-time high of 1,960.
The S&P 500 soared 1.3% with the afternoon peak reaching 3,695.
The Nasdaq also gained 1.3% following the intraday push to 12,596.
The Dow rose 1.1% with the late-day high tapping 30,243.
Energy and Utilities paced sector leaders after jumping 2% while Materials and Real Estate were higher by 1.8%. There were no sector laggards.
Shares of Apple Inc. (Nasdaq: AAPL) rallied 5% following news the company plans to produce up to 96 million iPhones for the first half of 2021, equating to a near-30% increase in year-over-year production. However, industry-wide shortages of key components could threaten that target.
Apple also shared a tentative full-year forecast with suppliers, planning to build up to 230 million iPhones in 2021.
The FOMC began its two-day meeting and announced its stance Wednesday at 2 p.m. EST. The asset-purchase plan is the focal point of the meeting and there is widespread speculation the Federal Reserve could extend the duration of its QE program. The Fed is purchasing $120 billion in assets, including $80 billion in Treasuries and $40 billion in mortgage-backed securities.
The surge in the virus and renewed lockdowns have added to the downside risks stressed by Fed Chair Jerome Powell and other Committee members, especially given the lack of fiscal support. However, with the vaccine rollout and some progress on a fiscal package, the Fed could take a wait-and-see stance.
The FOMC minutes from the early November meeting also did not suggest much urgency to act. The minutes also indicated there would be an update on forward guidance, and that could be seen in Wednesday’s announcement with the Fed again committing to support the economy for as long as necessary.
European markets closed mostly higher.
Germany’s DAX 30 soared 1.1% and the Belgium20 gained 0.8%. The Stoxx 600 added 0.3% and France’s CAC 40 nudged up 0.1%. UK’s FTSE 100 was down 0.3%.
Asian markets settled lower across the board despite positive economic news out of China.
Hong Kong’s Hang Seng dropped 0.7% and Australia’s S&P/ASX 200 fell 0.4%. South Korea’s Kospi and Japan’s Nikkei slipped 0.2% while China’s Shanghai dipped 0.1%.
China’s industrial output growth rose to 7% in November, matching expectations, and faster than the 6.9% expansion in October.
Import prices edged up 0.1% and export prices rose 0.6% in November following respective prints of -0.1% and 0.2% in October. This left respective 12-month rates at -1% year-over-year, unchanged for import prices, and at a -1.1 % pace from -1.6% year-over-year for export prices.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the second straight session following the afternoon fade to $157.31. Near-term and upper support at $157.50-$157 was breached but held. A move below the latter would indicate a retest towards $156-$155.50.
Resistance remains at $158.50-$159 and the 50-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) had its four-session winning streak snapped following the late-day pullback to 22.73. Current and upper support at 23-22.50 was recovered. A close below the latter would indicate a retest towards 21.50-21.
Resistance is at 24-24.50.
The Wilshire 5000 Composite Index (NYSE: WLSH) snapped a two-session slide after testing an intraday high of 38,868. Current and lower resistance at 38,750-39,000 was cleared and held. A move above the latter and last week’s all-time peak at 38,979 would indicate momentum towards 39,250-39,500.
Support is at 38,500-38,250 with a close below the 38,000 level signaling a possible near-term top.
RSI (relative strength index) is back in an uptrend with key resistance holding at 70. A close above this level would indicate additional strength towards 75-80 and levels from late August/early September. Support is at 65-60.
The Technology Select Sector SPDR Fund (NYSE: XLK) was up for the second straight session and for the third time in four after settling on its session peak of $126.83. Lower resistance at $126.50-$127 was cleared and held. A close above the latter would signal additional upside towards $127.50-$128 with the current all-time high at $127.72.
Current support is at $125-$124.50 followed by $123-$122.50.
RSI is in an uptrend with lower resistance at 65-70 getting challenged but holding. A close above the latter would signal upside towards 75-80 and levels from early September. Support is at 60-55.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.