U.S. Stocks Rise on Vaccine Optimism; Dollar Falls: Markets Wrap

U.S. stocks edged higher as vaccine progress boosted optimism in one of the final trading sessions of 2020. The dollar continued its slide, weakening to the lowest in 2 1/2 years.

Tech shares were among the best performers in S&P 500 Index. Travel and leisure companies advanced in Europe after the U.K. approved a coronavirus shot by AstraZeneca Plc and the University of Oxford. Volumes were light during the holiday week, with the Stoxx 600 Index seeing about half of the usual activity as it edged lower. Bitcoin extended its record-breaking rally, trading near $28,000.

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 with the discovery that the more infectious Covid-19 variant from the U.K. has arrived in Colorado.

“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, a second cluster of infections emerged in Sydney. U.S. President-elect Joe Biden criticized vaccine-distribution efforts under President Trump as too slow. U.K. Prime Minister Boris Johnson has approved placing further swathes of the country into stricter Tier 4 restrictions, according to the Times.

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. Treasuries and gold were little changed.

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 0.4% as of 9:31 a.m. in New York.
• The Stoxx Europe 600 Index slipped 0.1%.
• The MSCI Emerging Market Index climbed 1.3%.

Currencies

• The Bloomberg Dollar Spot Index declined 0.3%.
• The euro rose 0.3% to $1.2287.
• The British pound climbed 0.6% to $1.3587.
• The Japanese yen strengthened 0.5% to 103.07 per dollar.

Bonds

• The yield on 10-year Treasuries was little changed at 0.94%.
• 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 fell 0.5% to $47.74 a barrel.
• Gold strengthened 0.2% to $1,881.14 an ounce.

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