Dow Closes Above 30,000 For The First Time Ever

On Tuesday, the 124-year old Dow Jones Industrial Average closed above the 30,000 point mark for the first time in its history, almost four years after it first crossed the 20,000 mark. The Dow is now up more than 60% since its low in March, and surged through 30,000 with a 1.5% daily gain on Tuesday. News that Donald Trump is allowing the presidential transition to Joe Biden to begin, despite not having publicly conceded the election, helped boost sentiment. In addition, reports that Biden plans to appoint former Federal Reserve head Janet Yellen as his treasury secretary added to the positive atmosphere. Vontobel Wealth Management CIO Dan Scott told the FT that Yellen as treasury secretary “is a huge plus for markets.”

The positive outlook has continued overnight as Japan’s Nikkei hit its highest level since 1991. European markets are also up, the FTSE is 0.5% higher despite continued GBP strength. Sterling has been trading around two month highs as optimism for a Brexit deal grows.

It wasn’t just stocks in the green on Tuesday, as the price of oil continued to make progress, gaining a further 1% today, which takes it comfortably above $45 a barrel. The S&P 500’s energy sector as a whole was up 5.2% on Tuesday after gaining more than 7% on Monday.

Hard-hit stocks lead rally

Other hard-hit sectors rallied on Tuesday, with the S&P 500’s financials sector adding 3.5% and the materials sector up 2.5%. Overall the S&P 500 closed 1.6% higher, followed by the Dow’s 1.5% gain and the Nasdaq Composite’s 1.3% advance. Oil firm Chevron (CVS) led the Dow at +5%, followed by Wall Street giants JPMorgan Chase (JPM) and Goldman Sachs (GS) at +4.6% and +3.8%. Discount chain Dollar Tree (DLTR), miner Mosaic (MOS) and cruise line Carnival (CCL) led the S&P 500, all with double-digit gains, closely followed by United Airlines (UAL) and American Airlines (AAL), which both added more than 9%.

Signs of a smoother transition to a more stable administration, along with vaccine news, is boosting investor optimism that there is a solid path to the pandemic being brought under control, and appropriate financial support provided to the economy in the meantime. At the bottom of the S&P 500 was electronics retailer Best Buy (BBY), which sank 7% after it declined to provide a Q4 earnings outlook - which covers the crucial holiday period - as it reported expectation-beating Q3 earnings.

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