Stock futures signal Wall Street set to take another shot at records as 2020 winds down

Stocks were higher midday Wednesday, as Wall Street benchmarks took a run at another round of records in the penultimate trading session of 2020.

What are major benchmarks doing?
  • The Dow Jones Industrial Average DJIA, +0.29% rose 156 points, or 0.5%, to trade near 30,492.
  • The S&P 500 SPX, +0.17% was up 12 points, or 0.3%, near 3,739.
  • The Nasdaq Composite COMP, +0.25% gained 42 points, or 0.3%, to trade near 12,892.

Stocks ended slightly lower Tuesday after pushing to all-time intraday highs in early action, a day after the Dow, S&P 500, and Nasdaq Composite closed at records.

What’s driving the market?

Low volumes in the last week of the year ahead of the New Year holiday on Friday are making it more difficult than usual to discern whether action is being driven by events or money flows, analysts said.

“To me this just seems like a bit of a consolidation,” said Will Geisdorf, senior research analyst with Sarasota, Florida-based Allegiant Private Advisors.  “We’ll drift through the holidays with light volume and maybe in the first-second week of January we’ll get some catalysts.”

“The reflation trade has gone a little too far, too fast,” he added. “The early stages of the vaccine roll-out have been underwhelming and people are reconsidering how fast the economy is going to bounce back. I think we’re waiting for things to get a little more organized and the vaccine rollout to spread, and people will get back to the reflation trade.”

The market’s drift was partly blamed on a lack of action by the Senate on bigger direct payments to households, after the Democratic-controlled House on Monday passed legislation that would boost the size of payments from $600 to $2,000 as part of the $900 billion coronavirus financial aid package signed into law by President Donald Trump on Sunday.

Democrats have moved to back the call for bigger payments by President Donald Trump, but the Senate adjourned Tuesday without taking any action on the House bill to increase the size of the payments, with Majority Leader Mitch McConnell, R-Ky., hinting that he would like to tie the debate to other issues.

U.S. Treasury Secretary Steve Mnuchin said late Tuesday that direct deposit payments of $600 to many lower income Americans have begun and paper checks will start being mailed Wednesday.

Meanwhile, the U.S. counted at least 200,902 new COVID-19 cases on Tuesday, and at least 3,626 people died, according to a New York Times tracker. The new, more contagious COVID-19 variant recently discovered in the U.K. was detected in the U.S. for the first time, in Colorado, on Tuesday.

Also on the COVID front, AstraZeneca PLC AZN, -0.82% AZN, +0.42% on Wednesday said the coronavirus vaccine it has developed with the University of Oxford has been approved by the U.K. government.

With vaccine developments continuing to make headway, most investors were looking through the pandemic’s resurgence in December.

“The path of least resistance is higher. Earnings estimates continue to improve, and every day we get closer to herd immunity, the likelier we’ll see a peak in earnings next year,” said Michael Reynolds, investment strategy officer at Glenmede, in an interview.

U.S economic data was mixed Wednesday. The U.S. trade deficit in goods climbed to $84.8 billion in November from $80.4 billion the month before, the Census Bureau said. Wholesale inventories ticked down 0.1% in November, rather than increasing as forecast, a good sign for economic demand.

The Chicago-area purchasing managers index rose to 59.5, higher than expected, in December, but pending home sales slid 2.6% in November, the National Association of Realtors said.

Which companies are in focus?
How are other markets trading?
  • In Asia, the Shanghai Composite SHCOMP, +1.05% gained 1.1%, while Hong Kong’s Hang Seng Index jumped 2.2% and Japan’s Nikkei 225 Index closed 0.5% lower.
  • London’s FTSE 100 UKX, -0.71% finished 0.7% lower. The pan-European Stoxx 600 Europe index SXXP, -0.34%  slipped 0.3%.
  • The yield on the 10-year Treasury note TMUBMUSD10Y, 0.926%   was virtually unchanged at 0.93%. Yields and debt prices move in opposite directions.
  • The U.S. benchmark West Texas Intermediate crude for February delivery CLG21, +0.67%  was little changed, down 3 cents to $47.97 a barrel.
  • Gold futures GC00, +0.62%  edged higher, up 0.4% to $1,890 an ounce as the dollar slipped.
  • The U.S. dollar DXY, -0.30% was 0.3% lower compared to a basket of trading partners.