The S&P 500 rose 0.4%, aided by the gain on big tech stocks, as the Nasdaq rose 0.9%. The 10-Year Treasury yield remained pressured, down to 0.66%. Yields fall when prices rise.
Investors are buying the dip in tech stocks, which corrected this September on valuation concerns after a big summer run-up. The Nasdaq is up more than 2% since Thursday morning.
Tech stocks have a heavy market cap weighting in the S&P 500, but other stocks were performing decently as well. First off, by midday, rising stocks beat decliners by a 3-2 ratio on the New York Stock Exchange. That was distributed fairly broadly throughout sectors, with cyclicals consumer discretionary, industrials and manufacturing all up several tenths of a percentage point. Bank stocks were flat-to-down as the yield curve cannot seem to expand, even with inflation running above long-term yields at present.
Congress seems to be moving to pass a fiscal stimulus bill of more than $2 trillion, a surprise, given expectations for $1 trillion or less. Democrats are drafting the bill and it remains to be see whether Republicans, less willing to spend currently, will agree. With interest rates at rock bottom levels and the economy still not close to fully reopened, the stimulus needed must be in the fiscal form. The bill would also include stimulus checks, which have already proven to be incredibly supportive of household spend, as unemployment has surged this year.
Vaccine news has moved the market less in recent days than it did earlier in the year as investors have digested the fact that a vaccine could be ready within the next several months. For now, small businesses, strapped for cash, need stimulus and investors are notching that as high up on their lists of fundamental drivers.