U.S. Stocks Climb, Led by Small Caps; Dollar Falls: Markets Wrap

(Bloomberg) -- U.S. stocks climbed, with small-cap shares outperforming in one of the final trading sessions of 2020. The dollar continued its slide, weakening to the lowest in 2 1/2 years.

Automakers were among the best performers as the S&P 500 Index edged higher, while the Russell 2000 gauge of smaller companies rallied about 1% for its biggest gain in almost two weeks. Travel and leisure companies rose in Europe after the U.K. approved a coronavirus shot by AstraZeneca Plc and the University of Oxford, offsetting pessimism sparked by a slower-than-planned rollout of shots in the U.S. Volumes were light during the holiday week, with trading in S&P 500 shares about 25% below the 30-day average. Bitcoin extended its record-breaking rally as it approached $29,000.

Investors have pushed stocks to sky-high valuations this year on expectations that widespread vaccine distribution in 2021 will reignite economic growth and boost corporate profits. The U.S. government has started sending Americans $600 payments for pandemic relief, but discouraging news came from Texas, where at least three shipments of Moderna Inc.’s vaccine arrived with signs that the shots had strayed from their required temperature range.

“Investors continue to weigh stimulus hopes against negative pandemic developments,” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote to clients. “Markets have aggressively priced in a lot of positive resolution to these events (and more) in 2021.”

With a volatile year coming to a close, risk assets such as stocks, corporate bonds and Bitcoin are sitting at or near record highs. The MSCI World Index of global stocks is set to end the year about 14% higher, having surged almost 68% since its March low.

On the coronavirus front, daily deaths in Germany surpassed 1,000 for the first time since the outbreak began, with a record increase in the last 24 hours. A Chinese state-backed vaccine developer said one of its shots prevents Covid-19 in almost 80% of people. U.S. President-elect Joe Biden criticized vaccine-distribution efforts under President Trump as too slow.

Elsewhere, Bloomberg’s dollar gauge fell to its lowest since April 2018 as traders squared currency positions ahead of the year’s end amid thin liquidity. Emerging-market stocks reached the highest level since 2007 on buoyant inflows.

Here are some key events coming up:

• U.S. initial jobless claims figures are published Thursday.
• Most global stock markets are closed Friday for New Year’s Day.

These are the main moves in markets:

Stocks

• The S&P 500 Index gained 0.1% as of 4 p.m. in New York.
• The Russell 2000 Index added 1.1%.
• The Stoxx Europe 600 Index slipped 0.3%.
• The MSCI Emerging Market Index climbed 1.7%.

Currencies

• The Bloomberg Dollar Spot Index declined 0.4%.
• The euro rose 0.4% to $1.2294.
• The British pound climbed 0.9% to $1.3624.
• The Japanese yen strengthened 0.3% to 103.23 per dollar.

Bonds

• The yield on 10-year Treasuries slipped one basis point to 0.93%.
• Germany’s 10-year yield was little changed at -0.58%.
• Britain’s 10-year yield was little changed at 0.21%.

Commodities

• West Texas Intermediate crude rose 0.6% to $48.29 a barrel.
• Gold strengthened 0.7% to $1,891.61 an ounce.

©2020 Bloomberg L.P.