Another rally for the S&P 500 on Wednesday is sending it to the edge of its record high, and this time big technology stocks are also rising on Wall Street.
The benchmark index was 0.9% higher in afternoon trading at 3,576, nearing its all-time high of 3,580.94 set in September.
The Dow Jones Industrial Average was also flirting with its own record, which was set before the pandemic sent the economy and markets crashing. It was up 88 points, or 0.3% , at 29,508, as of 1 pm. Eastern time, approaching its record of 29,551.42. The Nasdaq composite, meanwhile, was leading the market with a gain of 1.8%.
Enthusiasm about the economy’s possible return to normal has vaulted stocks higher this week following encouraging, but incomplete data on a potential vaccine for COVID-19. That pushed investors to shift dollars out of the old winners of the stay-at-home, virus-wracked economy and into beaten-down stocks that have a brighter future if people feel comfortable again going outside their homes.
Elsewhere in the market, some of the massive rotation that swept through early this week also eased off the accelerator. The S&P 500 was nearly evenly split between stocks rising and falling, while energy and bank stocks gave back a bit of their huge gains from Monday and Tuesday. Some prospective new winners of a post-vaccine economy were continuing to climb.
While several significant risks remain for Wall Street broadly, the optimistic case that investors are embracing is that one or more coronavirus vaccines could help corral the virus by the second half of next year, encouraging people to return to life as it was before the pandemic.
All that economic activity would come on top of the tremendous aid that the Federal Reserve and other central banks around the world are pumping into the economy through very low interest rates and massive purchases of bonds. Hope also remains that the U.S. government may eventually deliver some form of support for the economy.
Of course, several pessimistic cases also still hang over the market. One or more could ultimately derail what’s been a 9% rally for the S&P 500 already in November.
Chief among them is the continuing climb in coronavirus counts. Medical experts warn a difficult winter is approaching, and several European governments have already brought back restrictions on businesses to slow the spread of the virus there.
Even if the strictest lockdown measures don’t return to the United States, the worry is that scared customers will stay away from businesses regardless and undercut profits.
And even though early indicators have been encouraging about a potential coronavirus vaccine, there’s no guarantee one will ultimately be available or when.
Trading in the U.S. bond market is closed for Veterans Day, after Treasury yields climbed this week on hopes for a healthier economy and expectations that could lead to a pickup in inflation. The yield on the 10-year Treasury is close to its highest level since March.