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Wednesday, December 2, 2020
Banking Dow tops 20,000 as earnings feed rally, bonds fall

Dow tops 20,000 as earnings feed rally, bonds fall

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The Dow Jones Industrial Average climbed past 20,000 for the first time as stocks around the world extended a rally after corporate earnings reignited investors’ optimism in economic growth. Bonds sold off with oil.

The index for American blue chips took the round-number milestone after a handful of rallies fell short in the past month. It was the second-fastest 1,000-point trip in its history. European equities jumped the most since Nov. 9, swept up in trades favoring banks and cyclical companies. The yield on 10-year Treasury notes topped 2.50 percent. The Mexican peso slumped after Donald Trump said he plans to unveil actions that include steps toward building a border wall. Oil fell on increased U.S. stockpiles.

“With a swift move towards signing executive orders, coupled with underlying positive economic data, clarity has begun to hit the headlines, and all the US indexes are celebrating,” Quincy Krosby, market strategist at Prudential Financial Inc. said. “Clarity is the markets’ oxygen.”

The stock surge comes as Trump moves to fulfill pro-growth campaign promises, including identifying possible infrastructure projects, approval of two oil pipelines and cajoling of American carmakers to build plants in the U.S. Corporate earnings added to the bullish sentiment, with Boeing Co. the latest company to post results that topped expectations.Other global-growth signals such as rising bond yields are feeding higher bank lending margins, and re-invigorated spending is boosting consumer cyclicals.

Here are the main moves in markets:

Stocks: The Dow rose 153.02 points to 20,065.73 at 1:10 p.m. in New York. Boeing led gains in the index, rising 4.9 percent after profits climbed last quarter. The S&P 500 Index jumped 0.6 percent to a record 2,293.68. Industrial, technology and financial shares led gains.

The Stoxx Europe 600 Index jumped 1.3 percent, while Germany’s DAX rose to the highest level since May. Personal computer maker Logitech International SA led Europe’s stock gains after beating quarterly profit estimates, surging 16 percent. Banco Santander SA rose 3.4 percent on better-than-expected quarterly profits.

Bonds: The yield on the 10-year Treasury added four basis points to at 2.5 percent, the highest in a month. The yield on the benchmark Bund due in a decade rose five basis points to 0.46 percent, the highest level in a year.

Currencies: The dollar weakened against all its Group of 10 peers except the Australian dollar, as the Bloomberg Dollar Spot Index edged lower. The Mexican peso dropped to a session low after a New York Times report said Trump will sign an executive order for a border wall to be built. Turkey’s lira weakened 0.8 percent to 3.8155 per dollar on speculation further central bank tightening may be needed to stem its declines.

Commodities: The Bloomberg Commodity Index, which measures returns on raw materials, was down 0.5 percent, heading for the biggest drop in a week. West Texas Intermediate crude lost 0.9 percent to drop below $53 a barrel. Most industrial metals declined on the London Metal Exchange, cutting gains after the LMEX Index closed at the highest level since May 2015 on Tuesday. Iron-ore futures increased 1 percent to near the highest level in more than two years. Speculation of sustained Chinese demand for imports is outweighing repeated warnings from analysts that the rally is overextended and will unravel.


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