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Dow, S&P 500 end at records Wednesday as stocks rally in final week of 2021

MarketWatch logo MarketWatch 12/29/2021 Joy Wiltermuth
© bryan r. smith/Agence France-Presse/Getty Images

Major U.S. stock indexes swept to record closes Wednesday, except for the Nasdaq Composite Index, which finished slightly lower as longer-dated Treasury yields climbed to one-month highs.

Video: Stock futures are muted after another record for the S&P 500 (CNBC)


The omicron variant of the coronavirus remains a focus for investors, but the new strain has yet to significantly impede the market’s recent uptrend, even as the World Health Organization on Wednesday reported that the number of COVID-19 cases recorded world-wide increased by 11% last week compared with the previous week, led by the Americas. 

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How did stock indexes trade?
  • The Dow Jones Industrial Average rose 90.42 points, or 0.3%, ending at a record 36,488.63, eclipsing its previous Nov. 8 record close at 36,432.22.
  • The S&P 500 index gained 6.71 points, or 0.1%, finishing at a record 4,793.06.
  • The Nasdaq Composite Index shed 15.51 points, or 0.1%, closing at 15,766.22, after hitting an intraday high at 15,821.81.

On Tuesday, the Dow rose 95.83 points, or 0.3%, to end at 36,398.21, its second-highest close ever, marking a fifth straight advance for the blue-chip index. The S&P 500 slipped 4.84 points, or 0.1%, to close at 4,786.35, a day after closing at a record. The Nasdaq Composite fell 89.54 points, or 0.6%, to finish at 15,781.72.

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What drove the market?

The Dow scored its first record close Wednesday in almost seven weeks, but investors struggled to find fresh incentives to push the rally substantially higher in the final days of 2021.

Investors mostly have shaken off fears about COVID-19 impeding the U.S. economic recovery, but the interest-rate sensitive Nasdaq Composite closed slightly down Wednesday as the yield for the 10-year Treasury rose to its highest level in about a month at 1.54%.

“In terms of COVID, I think the market has largely been expecting it to be a temporary setback,” said James Ragan, director of wealth management research at D.A. Davidson, in a phone interview. “The consumer tends to come back pretty fast from these outbreaks,” he said.

Wall Street has been wagering that this year’s economic recovery and strong earnings from U.S. corporations will continue to underpin equity buying into 2022, at least for the first few months.

As COVID case counts rise, the U.S. has started shipping some doses of the recently authorized COVID-19 antivirals developed by Pfizer Inc. and Merck & Co. Inc. pills intended to be prescribed for people with mild or moderate cases.

“Despite global surges in Covid cases, the markets are reflecting the new reality that Covid is here to stay albeit more on our terms than its,” Kevin Philip, managing director at Bel Air Investment Advisors, wrote in emailed comments Wednesday, adding that next year he expects more “normalcy” to return to the world.

“With vaccines, boosters, treatments, and rising herd immunity, it seems more and more like a manageable virus in line with colds and flus than what it originally was,” he said. “We also have a friendly Federal Reserve, which the market views is responsibly accelerating its wind-down of QE.” 

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In U.S. economic data Wednesday, the trade deficit in goods surged by 17.5% in November to set an all-time high, keeping the U.S. on track in 2021 to post its biggest annual shortfall on record. An early or advanced look at the trade gap in goods showed that it increased to $97.8 billion in November from a revised $83.2 billion in October, according to the U.S. Census Bureau. The U.S. is poised to surpass a record set in 2006 and incur its biggest international trade deficit ever.

Separately, the number of home buyers who signed a contract to purchase a home in November declined, as high home prices give buyers pause. Pending home sales decreased 2.2% in November compared with October, the National Association of Realtors reported Wednesday.

Which companies were in focus?
  • Shares of Biogen Inc.  advanced 9.5% Wednesday, after the Korea Economic Daily reported that the U.S.-based drug maker is in talks to be acquired by South Korea-based conglomerate Samsung Group in a deal that could value Biogen at roughly $42 billion.
  • Cruise ships shares mostly fell Wednesday, weighing on Carnival Corp Norwegian Cruise Line and Walt Disney & Co. DIS, which operates ships as well as theme parks, that have grappled with rising COVID-19 infections.
  • Shares of NRx Pharmaceuticals Inc.  added 10.4% Wednesday, after the drug development company said it filed a new Breakthrough Therapy Designation with the Food and Drug Administration for Zyesami in patients at immediate risk of death from COVID-19. 
  • Shares of Facebook parent Meta Platforms Inc.  dropped 1% Wednesday, reversing earlier intraday gains of as much as 1%, after the Wall Street Journal reported that the social-media and metaverse company looked to divide lawmakers along party lines to forestall any bipartisan attempt to install tougher rules on social-media platforms.
  • Shares of Tesla TSLA fell 0.2% after CEO Elon Musk sold another $1 billion of stock in the electric-vehicle maker, according to Securities and Exchange Commission filings, to pay the taxes for the exercise of a 1.55 million share option.
  • Shares of Apple Inc. rose 0.1% after reports that the iPhone maker is paying up to $180,000 to prevent employees from moving to tech rivals including Meta Platforms, according to Bloomberg News.
How did other assets fare?
  • The yield on the 10-year Treasury note TMUBMUSD10Y was at 1.542%, up by about 6.2 basis points, its highest since Nov. 24, according to Dow Jones Market Data. Yields for debt rise as prices falls.
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.3%.
  • Oil futures rose, with the U.S. benchmark CL00 closing up 0.8% to settle at $76.56 a barrel. Gold futures GC00 for February delivery GCG22 declined 0.3% to settle at $1,805.80 an ounce.
  • Bitcoin BTCUSD was about 1.2% lower around $47,195, adding to a downturn on Tuesday.
  • The Stoxx Europe 600 index SXXP ended 0.1% lower, while London markets rose 0.7% in their first trading after the Christmas holidays.
  • In Asian trade, the Shanghai Composite SHCOMP ended 0.9% lower, while the Hang Seng Index HSI fell up 0.8%. Japan’s Nikkei 225 NIK closed 0.6% lower and China’s CSI 300 000300 booked a 1.5% decline.

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