The S&P 500 climbed to a record high close on Wednesday and the Nasdaq Composite Index dipped as investors weighed upbeat vaccine developments and a potential coronavirus fiscal package against a bleak private jobs report. Canada’s S&P/TSX Composite Index closed up 61.28 points, or 0.35%, at 17,358.21, with energy and cannabis stocks leading the way.
The energy sector advanced nearly 2% in Canada, thanks to firmer crude oil prices on anticipation that the Organization of the Petroleum Exporting Countries will maintain production limits next year. U.S. crude rose 1.3% to US$45.13 per barrel and Brent was at $48.20, up 1.64% on the day. Oil has raced up nearly 30% over the last month.
TSX-listed cannabis stocks jumped on Wednesday after the United Nations Commission on Narcotic Drugs voted to accept a World Health Organization recommendation to remove cannabis from a category of the world’s most dangerous drugs. Aurora Cannabis rose 11.33% and Aphria 7.77%.
The financials sector rose 0.22% as two more banks - RBC and National Bank - beat Street forecasts for quarterly profits. Royal Bank of Canada, however, closed down 0.61%, as the profit beat may have already been baked into the stock price following gains on Tuesday when the first two big Canadian banks reported upbeat results.
Republicans and Democrats in Congress remained unable to reach agreement on fresh relief for a pandemic-hit U.S. economy, although some investors said bad economic news could spur policy makers to push harder for a deal.
U.S. House Majority Leader Steny Hoyer also expressed hope that a deal could be reached “in the next few days.”
Signs of progress in the race to distribute a vaccine have driven U.S. stocks higher in recent days. In the latest upbeat development, Pfizer Inc and BioNTech’s COVID-19 vaccine got the green light for use in Britain, the first Western country to approve a shot for COVID-19. Pfizer jumped 3.5% and BioNTech surged about 6%.
Underscoring the argument for fiscal stimulus, data showed private payrolls increased less than expected in November, likely as soaring new infections and business restrictions hampered the labor market’s recovery.
Moreover, the Federal Reserve’s Beige Book report showed “little or no growth” in four of the central bank’s 12 U.S. districts and only modest growth elsewhere in recent weeks.
Any potential sign of a worsening labor market in Friday’s broader jobs report could put more pressure on Congress to agree on a stimulus package, said Ross Mayfield, an investment strategy analyst at Baird.
“They are watching this stuff as much as investors are,” Mayfield said. “It could be one of those reports where bad news is good news if it spurs the right stakeholders to come to the table.”
Positive updates on coronavirus vaccine have helped investors raise bets on a swift economic rebound next year, powering the S&P 500 and Nasdaq to record highs on Tuesday.
A rotation into value stocks continued, with the S&P 500 financial index and energy index stocks gaining, while consumer staples dropped.
The Dow Jones Industrial Average rose 0.2% to end at 29,883.79 points, while the S&P 500 gained 0.18% at 3,669.01.
The Nasdaq Composite slipped 0.05% to 12,349.37, dragged by a 2.7% slide in Tesla Inc.
Getting a generous stimulus package through Congress is a top priority, President-elect Joe Biden said in an interview with the New York Times. He also said he would not immediately cancel the Phase 1 trade deal that Trump struck with China.
The biggest drag on the blue-chip Dow was a nearly 9% slump in Salesforce.com Inc after the software company agreed to buy workplace messaging app provider Slack Technologies Inc in a $28 billion deal as it bets on an extended run for remote working. Slack fell more than 2%.
Advancing issues outnumbered decliners on the NYSE by a 1.46-to-1 ratio; on Nasdaq, a 1.16-to-1 ratio favored advancers.
The S&P 500 posted 18 new 52-week highs and no new lows; the Nasdaq Composite recorded 89 new highs and 12 new lows.
Volume on U.S. exchanges was 11.6 billion shares, compared with the 11.7 billion average over the last 20 trading days.
Spot gold added 0.7% to $1,828.23 an ounce. U.S. gold futures gained 0.72% to $1,827.20 an ounce
Read more: Stocks that saw action Wednesday - and why
Reuters, with files from Darcy Keith of The Globe and Mail
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