December 1, 2020
Renewed hopes for a US fiscal stimulus deal gave equities a lift Tuesday, along with positive vaccine news. The Dow Jones industrial index rose 0.6 percent, the S&P 500 gained 1.1 percent, and the NASDAQ 100 gained 1.3 percent. NYMEX WTI crude oil prices declined, the dollar fell, and US Treasury yields surged.
Negotiations over a fiscal package showed signs of resuming Tuesday in Washington, D.C. A bipartisan group was reportedly set to unveil a new spending package, and Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi were talking as well. The fiscal hopes added to optimism over rollout of vaccines by year end, which has fueled expectations for a wider recovery by the second half of 2021.
Markets reacted favorably to news that BioNtech and Pfizer had asked European authorities to approve use of their Covid-19 vaccine, after a similar request to US authorities. A strong reading in Chinese PMI manufacturing data added to recovery hopes, and gave trade-sensitive sectors a lift.
In US economic news, the ISM manufacturing composite index came in very near expectations at a very solid score of 57.5, yet employment went into reverse, falling nearly 5 points to a sub-50 score of 48.4 that indicates net contraction in staffing. Separately, construction spending rose a higher-than-expected 1.3 percent in October for year-over-over growth of 3.7 percent. Relative to the pre-pandemic month of February, headline spending is nearly even, down only 0.2 percent.