Stocks Climb to Record Amid Stimulus Discussions: Markets Wrap

(Bloomberg) -- Stocks rose to a record as stimulus talks tempered concern about tougher restrictions amid a surge in coronavirus cases.

The S&P 500 closed at an all-time high after Senate Majority Leader Mitch McConnell suggested setting aside some issues that have been roadblocks to a relief package -- a strategic retreat aimed at striking a deal. The Nasdaq 100 advanced for a 10th straight day, the longest rally in about a year. Pfizer Inc. jumped as U.S. regulators gave early indications they may grant emergency-use authorization to its vaccine. Tesla Inc. erased losses that were driven by plans to raise as much as $5 billion.

Time is running ever shorter on getting fresh stimulus, with lawmakers approaching the year-end break just as U.S. Covid-19 cases surpass 15 million. Democrats have opposed McConnell’s insistence on giving employers a shield from lawsuits, while he has been among Republicans blasting Democratic demands for assistance to state and local authorities as a bailout. The Kentucky Republican said both parties should focus on three areas where they agree help is needed: small business assistance, expanded unemployment insurance and funding for vaccine distribution and other anti-coronavirus efforts.

“After months of inaction by leaders in Washington, the market is likely to respond well to any movement towards additional fiscal support,” said Adam Phillips, director of portfolio strategy at EP Wealth Advisors. “However, motion is not the same as action. If these discussions do not lead to results, we could see the market give up some of its recent gains.”

A key sentiment indicator for U.S. stocks has reached its most bullish level in two decades. The weekly Cboe ratio of volume traded in puts versus calls fell to the lowest since July 2000 last week. This implies extreme positioning to the upside, as investors look beyond short-term uncertainty toward a continuing global recovery in 2021.

Elsewhere, the pound pared declines after the U.K. dropped controversial parts of an internal bill that would have given it the power to unilaterally override the Brexit divorce treaty. Prime Minister Boris Johnson will hold crisis talks with European Commission President Ursula von der Leyen Wednesday evening as the two sides try to salvage a trade deal by the end of the year.

Here are some key events coming up:

• Thursday brings the European Central Bank policy decision and a press briefing from Christine Lagarde. Economists widely expect the central bank to increase and extend its pandemic bond-buying program.
• The U.S. Food and Drug Administration meets to discuss the vaccine made by Pfizer/BioNTech on Thursday. If the FDA authorizes emergency use, Health & Human Services Secretary Alex Azar said vaccine distribution could begin within 24 hours.

These are some of the main moves in markets:

Stocks

• The S&P 500 increased 0.3% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index climbed 0.2%.
• The MSCI Asia Pacific Index fell 0.1%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro was little changed at $1.2106.
• The British pound declined 0.2% to $1.3351.
• The Japanese yen weakened 0.1% to 104.16 per dollar.

Bonds

• The yield on 10-year Treasuries fell less than one basis point to 0.92%.
• Germany’s 10-year yield decreased three basis points to -0.61%.
• Britain’s 10-year yield dipped three basis points to 0.257%.

Commodities

• West Texas Intermediate crude fell 0.2% to $45.66 a barrel.
• Gold rose 0.5% to $1,871.25 an ounce.

©2020 Bloomberg L.P.