U.S. stocks higher after Trump signs $900 billion aid package
Stocks began the final week of 2020 moderately higher after President Donald Trump signed a $900 billion economic aid package that helps reduce uncertainty amid the reimposition of travel and business curbs in response to a new coronavirus variant.
The S&P 500 index was up 1% as of 2:50 p.m. Eastern. The Dow Jones industrial average rose 244 points, or 0.8%, to 30,442 and the Nasdaq composite was up 1%. The gains put the indexes on track to close at all-time highs.
Trump signed the measure, which also includes money for other government functions through September, despite expressing frustration that $600 payments to the public weren't bigger. His signature helped to clear away uncertainty as reinstated travel and business curbs threaten to weigh on global economic activity.
"By and large, it's a kind of broad-based optimism, so-far-so-good on the vaccine rollout, and the stimulus bill to bridge the gap," said Ross Mayfield, investment strategist at Baird, "It's really just a continuation of the broader strength that we've seen over the last couple of months."
Stocks are getting a seasonal tail wind, too, Mayfield said. The market tends to climb in the final five days of trading in December and the first two trading days in January, a phenomenon known as the "Santa Claus rally." Since 1950, the S&P 500 index has risen an average of 1.3% during those seven days.
Companies that were hit the hardest by the pandemic - restaurants, airlines and the cruise industry - were among the biggest gainers Monday. American Airlines was up 3.4%, Norwegian Cruise Lines rose 5.2% and Carnival gained 4.9%.
Technology and communication services stocks accounted for a big slice of the broad market rally. Apple climbed 3.8% and Facebook rose 3.1%.
Shares in Chinese e-commerce giant Alibaba Group rose 0.3%, recovering some of their losses after plunging last week when government regulators launched an antimonopoly investigation and the stock market debut of Ant Group, an online finance platform in which Alibaba owns a 33% stake, was suspended.
Treasury yields were broadly higher, a sign of confidence in the economy. The 10-year Treasury yield, which can affect interest rates on mortgages and other consumer loans, was at 0.94%.
Trading is expected to be light this week, as most fund managers and investors have closed their books for the year. It will be another holiday-shortened week, with New Year's Day on Friday.
European indexes closed broadly higher, helped by more details about the European Union - United Kingdom trade deal as part of the U.K.'s exit from the trade bloc. Germany's DAX rose 1.5%, while the CAC-40 in France gained 1.2%.
In Asia, the Shanghai Composite Index rose less than 0.1% to 3,397.29 while the Nikkei 225 in Tokyo added 0.7% to 26,854.03.
The Hang Seng in Hong Kong declined 0.3% to 26,314.63 after e-commerce giant Alibaba Group announced it was expanding a share buyback from $6 billion to $10 billion.