NEW YORK:Wall Street shares gained on Tuesday in choppy trading, as investors took advantage of the previous session’s slump to buy them back, ahead of the outcome of the Senate runoff elections in the battleground state of Georgia.
The Georgia election will determine the balance of power in Washington.
Overall, Analysts expect the stock market to consolidate December’s gains in January, as asset managers looked to rebalance their portfolios that had been heavily tilted toward equities.
The latest polls from data website 538 https://projects.fivethirtyeight.com/georgia-senate-polls gave a slight edge to the two Democratic challengers who need to win both races for Democrats to gain U.S. Senate control from Republicans.
Along with their narrow majority in the House of Representatives, a “blue sweep” of Congress could usher in larger fiscal stimulus. It could also pave the way for President-elect Joe Biden to push through greater corporate regulation and higher taxes.
“Historically after a strong December, January’s returns tend to be more muted and this January may be more muted with the Georgia elections providing some volatility along with the uncertainty toward tax policies,” said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.
The Cboe Volatility Index flip-flopped after closing at its highest level in two months on Monday, which saw Wall Street’s main indexes drop to two-week lows as investors booked profits at the start of the year.
Energy stocks jumped about 7% on the back of higher oil prices. [O/R]
Consumer staples, utilities and healthcare were the laggards.
Although the start of vaccine rollouts and massive monetary support powered the major U.S. stock indexes to record levels recently, the discovery of a more contagious variant of the coronavirus and the latest virus-related curbs have muddied the economic outlook.
Britain, where new variant first emerged, began its third national lockdown, while New York on Monday found its first case of the highly contagious mutation of the coronavirus.
In terms of economic data, stocks got a boost from a survey by the Institute of Supply Management, which showed that U.S. manufacturing activity rose to its highest level in nearly 2-1/2 years in December, likely as spiraling new COVID-19 infections pulled demand away from services towards goods.
Chipmaker Micron Technology Inc rose about 3.8% after Citigroup raised its rating on the stock to “buy” on expectations of a recovery in demand and pricing for DRAM chips.
U.S.-listed shares of China Telecom Corp Ltd and China Mobile Ltd added about 7.1% and 8.6% respectively, while those of China Unicom Hong Kong Ltd advanced 12% after the NYSE reversed its decision to delist the stocks.
Advancing issues outnumbered declining ones on the NYSE by a 3.35-to-1 ratio; on Nasdaq, a 2.67-to-1 ratio favored advancers.
The S&P 500 posted 19 new 52-week highs and no new lows; the Nasdaq Composite recorded 106 new highs and four new lows.
“We remain bullish on stocks, but we’re going to bounce around. January is going to be pretty choppy,” said Baker Avenue’s Lip.
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