Dow hits all-time high on Biden transition, rebound hopes

(Reuters) – Wall Street’s main indexes jumped on Tuesday and the blue-chip Dow hit a record high as the formal go-ahead for President-elect Joe Biden’s transition to the White House ended weeks of political uncertainty.

FILE PHOTO: A man wearing a protective face mask walks by 14 Wall Street, as the global outbreak of the coronavirus disease (COVID-19) continues, in the financial district of New York, U.S., November 19, 2020. REUTERS/Shannon Stapleton/File Photo

All the 11 major S&P indexes were up, with economically-sensitive sectors such as banks, industrials and energy leading gains as investors rotated out of technology heavyweights that were seen as safe bets during the recession.

The Dow was lifted by a 4.9% rise in Boeing after European regulators gave draft approval to its 737 MAX jets, paving the way for a formal flight clearance in January.

“Today, the market is going to largely focus on the new administration’s steps going forward,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.

After weeks of legal challenges by the Trump campaign to overturn the election result, the U.S. federal agency that must sign off on the presidential transition told Biden on Monday that he can formally begin the hand-over process.

Sentiment was also boosted on reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary, which could shift the focus heavily toward efforts to tackle growing economic inequality.

Tesla Inc jumped 3.3%, with the electric-car maker crossing $500 billion in market capitalization as investors lapped up its shares in the run-up to its addition to the S&P 500 index.

At 10:28 a.m. ET, the Dow Jones Industrial Average was up 381.55 points, or 1.29%, at 29,972.82, the S&P 500 was up 34.06 points, or 0.95%, at 3,611.65, and the Nasdaq Composite was up 37.95 points, or 0.32%, at 11,918.58.

Recent data suggesting a COVID-19 vaccine could be available before the end of the year has put the benchmark S&P 500 on course for its best November since 1980 and brought the Dow close to breaching 30,000 points for the first time.

BlackRock Inc, the world’s largest asset manager, on Monday upgraded U.S. equities to “overweight”, turning bullish on quality large-cap technology companies and small cap firms that tend to perform well during a cyclical upswing.

“There is a lot of interest in industrials, basic materials, financials – that’s what you are supposed to buy for the text books when the economy is indicating that it’s going to enter into a rebound or an expansion cycle,” Pavlik said.

The S&P value index, which includes economically-sensitive sectors such as financials and industrials, has gained about 12% so far in November compared with a 9% rise in the S&P 500. By contrast, the growth index, comprising the technology mega-caps, is up less than 8%.

Advancing issues outnumbered decliners 3.94-to-1 on the NYSE and 2.01-to-1 on the Nasdaq.

The S&P index recorded 43 new 52-week highs and no new low, while the Nasdaq recorded 146 new highs and four new lows.

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