The stock market continued to stubbornly press forward Wednesday in the face of numerous headwinds, including a surprising development in Washington.
Congress on Tuesday passed a $900 billion stimulus package on to President Donald Trump, who was widely expected to sign it but instead lambasted the bill for its $600 direct payments, demanding a higher level ($2,000) than even Democrats had previously pushed for. He didn't directly threaten to veto the existing bill, however.
"President Trump’s demand for revisions to the COVID relief bill to raise the individual payment amount to $2,000 significantly raises uncertainty for the days ahead, but our base case remains that the bill passed by Congress will become law," say Raymond James analysts, echoing many other experts' sentiments.
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Meanwhile, U.S. COVID hospitalizations hit a record 117,777 yesterday, and economic data was dour – durable-goods order growth decelerated sharply in November, as did U.S. new-home sales.
Nonetheless, the Dow Jones Industrial Average finished with a 0.4% gain to 30,129, and the small-cap Russell 2000 kept up the momentum with a 0.9% jump to a record 2,007.
Other action in the stock market today:
- The S&P 500 eked out a marginal gain to 3,690.
- The Nasdaq Composite declined 0.3% to 12,771.
- Gold futures lost 0.6% to settle at $1,870.30 per ounce.
- U.S. crude oil futures slumped for a second straight day, losing 2.0% to $47.97 per barrel.
Energy, Financials Lead the Way
It was hardly an even rally, however. Wednesday's clear winners were again part of the "rotation trade."
A big drawdown in U.S. crude inventories sent oil prices 2.3% higher, helping Dow component Chevron (CVX, +1.6%) and a host of other energy stocks. But green energy stocks continued to soar, too – the stimulus bill (at least in its current form) will extend tens of millions of dollars' worth of tax credits to solar and wind firms.
Financial stocks, including JPMorgan Chase (JPM, +2.8%) and Goldman Sachs (GS, +2.5%), also shot upwarD. Even though the financial sector still faces a major headwind in the form of near-zero interest rates, Wall Street broadly likes its chances in 2021 given expectations for continued economic recovery and a shift into underloved value stocks.
But the financial-sector equities catching the most attention heading into the new year might surprise you – there are a few banks, sure, but there are also less traditional plays such as lease-to-own financers and even data providers that are nonetheless vital to the sector. Read on as we highlight some of the best financial stocks to buy for 2021.
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