Stocks close at new highs after signing of COVID-19 rescue package

Stocks closed at record highs Monday as Wall Street entered the final week of 2020, after President Donald Trump signed a $900 billion economic aid package.

The package helps reduce uncertainty amid the re-imposition of travel and business curbs in response to a new coronavirus variant.

The measure also includes money for other government functions through September, but Trump expressed frustration that payments to the public weren’t bigger.

The S&P 500 Index, Dow Jones industrial average and Nasdaq Composite all closed at all-time highs. U.S. investors cheered the U.S. aid package, restoring some of the optimism that drove global stocks to a record this month even as the pandemic escalated. Goldman Sachs Group Inc. upgraded its first-quarter U.S. economic growth forecast because of the measure.

“The new law is large enough to make a significant difference for individuals,” Dennis DeBusschere, head of portfolio strategy at Evercore ISI, said in a note to clients. “Ignore the noise about the ‘disappointing’ checks and focus on the setup for a robust economic recovery in 2021, particularly in the services sector.”

Companies that were hit the hardest by the pandemic—restaurants, airlines, the cruise industry—were among the biggest gainers in early trading.

The S&P 500 index rose 0.9%, or 32 points, to close at 3,735. The Dow Jones industrial average increased 204 points, or 0.7%, to 30,404, and the Nasdaq composite added 95 points, or 0.7%.

Trump signed the measure, which also includes money for other government functions through September, despite expressing frustration that $600 payments to the public weren’t bigger. His signature helped to clear away uncertainty as reinstated travel and business curbs threaten to weigh on global economic activity.

“By and large, it’s a kind of broad-based optimism, so-far-so-good on the vaccine rollout, and the stimulus bill to bridge the gap,” said Ross Mayfield, investment strategist at Baird, “It’s really just a continuation of the broader strength that we’ve seen over the last couple of months.”

Stocks are getting a seasonal tailwind, too, Mayfield said. The market tends to climb in the final five days of trading in December and the first two trading days in January, a phenomenon known as the “Santa Claus rally.” Since 1950, the S&P 500 index has risen an average of 1.3% during those seven days.

Companies that were hit the hardest by the pandemic — restaurants, airlines and the cruise industry — were among the biggest gainers Monday. American Airlines was up 3.4%, Norwegian Cruise Lines rose 5.2% and Carnival gained 4.9%.

Technology and communication services stocks accounted for a big slice of the broad market rally. Apple climbed 3.8% and Facebook rose 3.1%.

Shares in Chinese e-commerce giant Alibaba Group rose 0.3%, recovering some of their losses after plunging last week when government regulators launched an anti-monopoly investigation and the stock market debut of Ant Group, an online finance platform in which Alibaba owns a 33% stake, was suspended.