The S&P 500 closed in positive territory on Wednesday as an expected stimulus deal and falling jobless claims prompted investors to put their money into sectors most likely to benefit from the economy re-opening when it recovers from the global health crisis.
While the blue-chip Dow and small caps led the gains,the tech-heavy Nasdaq ended the session slightly lower.
The Dow Jones Industrial Average rose 113.96 points, or 0.38%, to 30,129.47, the S&P 500 gained 2.72 points, or 0.07%, to 3,689.98 and the Nasdaq Composite dropped 36.80 points, or 0.29%, to 12,771.11.
Cyclical stocks
Economically vulnerable cyclical stocks, which were battered by mandated shutdowns and stand to benefit most from economicrecovery, were outperforming.
The rotation into cyclicals reflects a growing confidence in recovery from the pandemic recession, and began in fits and starts after promising late-stage vaccine data was released in early November.
"It's a very welcoming sign to see rotation into beaten downsectors," said Matthew Keator, managing partner in the KeatorGroup, a wealth management firm in Lenox, Massachusetts. "It speaks to the importance to valuation and the importance ofdiversification."
"It also speaks to the hope that is out there," Keator added. "When you see oil pick up and travel and tourismindustries pick up, it speaks to the market looking forward andpricing in that hope."
The possibility of a year-end shutdown of the US government, not to mention the lack of new fiscal stimulus,raised its head after President Donald Trump threatened to veto a $2.3 trillion funding package, which also includes along-awaited $892 billion pandemic relief deal.
A Brexit trade deal between Britain and the European Union appeared more likely after a senior European diplomat toldReuters that an agreement could be imminent.
A raft of mixed economic data showed a welcome decrease injobless claims and an uptick in new orders for durable goods,but also a pullback in consumer spending, dropping personalincome and fading sentiment as the holiday shopping season nearsits end amid a resurgent pandemic.
But languid inflation data provided further assurance thatthe U.S. Federal Reserve is likely to maintain its accommodativemonetary policy at least until 2024.
Drugmaker Pfizer Inc rose following a deal with theUnited States to supply 100 million additional doses of itsCOVID-19 vaccine by July.
Merck & Co Inc agreed to supply the U.S. governmentwith up to 100,000 doses of its COVID-19 treatment, sending itsstock higher.
Supernus Pharmaceuticals Inc surged after itsexperimental drug for attention deficit hyperactivity disordermet the main goal of a late-stage study in adults.
Shares of Nikola Corp plunged after it called off adeal to develop electric garbage trucks with recycling and wastedisposal firm Republic Services Inc.