U.S. stocks climbed to records Monday after President Trump signed a Covid-19 aid bill, averting a government shutdown and ending uncertainty about the rollout of the spending package.
The Dow Jones Industrial Average added 204.10 points, or 0.7%, to 30403.97. The S&P 500 advanced 32.30 points, or 0.9%, to 3735.36 and the Nasdaq Composite gained 94.69 points, or 0.7%, to 12899.42. All three indexes set new closing highs.
Mr. Trump’s signing of the $900 billion bill paves the way for the government to make direct payments to American households as the surging coronavirus pandemic continues to disrupt business and social activity. Investors expect that the additional spending will help cushion the economy amid restrictions put in place by states and local authorities to manage Covid-19’s spread in the winter.
“Economically speaking, it is a major support to bridge over this difficult winter period,” said Hani Redha, a multiasset portfolio manager at PineBridge Investments. “The market is going to still be in a constructive mood.”
Travel stocks were among the biggest gainers in the market Monday. Many such companies have been hit hard by restrictions tied to the pandemic, making them look especially cheap to investors.
American Airlines, AAL 2.55% among the U.S. airlines that will receive $15 billion in aid to help bring back furloughed workers, jumped 40 cents, or 2.6%, to $16.06. The stock remains down 44% for the year, compared with the S&P 500’s 16% gain.
Norwegian Cruise Line NCLH 3.86% advanced 95 cents, or 3.9%, to $25.53 and fellow cruise operator Carnival gained 87 cents, or 4.2%, to $21.71. Both stocks are still down more than 50% in 2020, hurt by widespread suspensions of sailings around the world.
Meanwhile, technology stocks took a step back, with Zoom Video Communications ZM -6.34% sliding $23.78, or 6.3%, to $351.39 and Chewy falling $11.40, or 11%, to $92.61. Despite Monday’s moves, shares of companies focused on e-commerce, online communications and at-home entertainment have been among the best-performing stocks in the market this year, a testament to how consumer behavior has changed due to pandemic-related lockdowns.
Overseas, the pan-continental Stoxx Europe 600 rose 0.7%. Markets in the U.K. were closed for Boxing Day.
Sentiment in the region was buoyed after the European Union began distributing Covid-19 inoculations Sunday. Just days earlier, the EU reached a post-Brexit trade agreement with the U.K., bringing an end to years of uncertainty about future relations between the two sides.
“Every day that is going by, we are removing uncertainties more than we’re adding them,” Mr. Redha said.
Trading in Asia closed on a mixed note. China’s Shanghai Composite Index was largely flat, while Japan’s Nikkei 225 rose 0.7%. Hong Kong’s Hang Seng edged down 0.3%.
Hong Kong-listed shares of Alibaba Group Holding tumbled 8%. China’s central bank released a harshly worded statement Sunday criticizing Ant’s business practices and instructing the financial-technology giant to shift its focus back to its digital payments business.
Looking forward, analysts say trading volumes are likely to remain thin this week, with many investors and traders taking time off in the year-end holiday period. Markets in the U.S. will be shut Friday in observance of New Year’s Day.
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Appeared in the December 29, 2020, print edition as ‘Aid Bill Propels Stocks To Highs.’