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US stock markets surged sharply to record highs on Tuesday with the Dow Jones Industrial Average breaking the historic level of 30,000 amid positive vaccine news, President-elect Joe Biden’s transition and optimism for a strong economic recovery in 2021.
All the three major market benchmarks rallied during the day. The 30-stock Dow rallied 454.97 points or 1.54 per cent to snap the session at 30,046. Nasdaq Composite ended higher by 156.15 points or 1.31 per cent to 12,037. S&P 500 index was the top gainer among the three, adding 57.82 points or 1.62 per cent to end at a record high of 3,635.
The rally in the market was primarily induced by positive news from the vaccine front, and the increasing clarity on the political front after Trump accepted the US Presidency transition. Later, Biden unveiled his administration and unveiled his choices, including longtime aide Antony Blinken as Secretary of State. A major boost to the market came with the speculation that Biden would appoint Federal Reserve Chair Janet Yellen as Treasury Secretary. If it happens, Yellen will become the first woman to hold the post.
Dow at historic high
It was a remarkable day for the Dow Jones Industrial Average, as it not only broke the historic level of 30,000, but the surge on Tuesday will put the Dow up more than 13% in November, which is the biggest monthly gain since 1987. The index started the day at 29,746.11, which remained its lowest for the day, while it reached a high of 30,116.51 in its intraday trade.
For three months, the index is up by around 9.41 per cent, while for year-to-date gains are 5.28 per cent. Among its components, top gainers for the day were Chevron Corp. up by 5.04 per cent, JPMorgan Chase & Co. up by 4.62 per cent, Goldman Sachs Group Inc. up by 3.79 per cent and Walt Disney Co. up by 3.77 per cent.
The surge in the markets, especially cyclical industries share like Chevron Corp shows that the market is lapping up the development of vaccine and regime change with the Trump administration making available the federal resources to President-elect Biden’s team and ending the apprehension over a bumpy transition.
Rally across the globe
The jubilation was not only limited to the US markets, but other major indices across the globe also surged on optimism of early availability of the vaccine. The UK benchmark index FTSE 100 ended higher by 1.55 per cent to 6,432.17, German benchmark index DAX was up by 1.26 per cent to 13,292.44, French benchmark index CAC 40 was up by 1.21 per cent to 5,558.42. Even the major Asian markets are extending their gains on 25 November, Japanese Nikkei was up by around 1 per cent, while Hong Kong’s Hang Seng was up by little over half a per cent in early deals.
For the last few days, there has been growing optimism among the investors with positive vaccine news as after Moderna and Pfizer-BioNTech, another pharmaceutical company, AstraZeneca reported that an early trial showed its vaccine candidate had an average efficacy of 70 per cent. Though there has been a continuous increase in the number of cases across the globe, traders and investors shrugging off the news concentrated on potential near-term economic impact, amid rising prospect that with the start of mass vaccination companies would start reviving.
