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James Hyerczyk
U.S. Stock Market

The major U.S. stock indexes closed higher on Friday as investors wrapped up a holiday-shortened, but strong week amid fading political uncertainty over the presidential transition and positive vaccine news. Retailers also kicked off the Christmas shopping season with optimistic expectations despite record COVID-19 hospitalizations.

The benchmark S&P 500 reached a new closing high and the blue-chip Dow Jones Industrial Average finished above 30,000 for the first time ever. Meanwhile, the NASDAQ Composite outperformed the other majors as investors moved back into tech-related, market-leading stocks that have fared well throughout the pandemic, while economically sensitive cyclical stocks slowed gains.

In the cash market on Friday, the S&P 500 Index settled at 3638.15, up 8.70 or +0.26%, the Dow Jones Industrial Average finished at 29910.37, up 37.90 or +0.14% and the NASDAQ Composite closed at 12205.85, up 111.45 or +1.00%.

Rise in Optimism Sinks the VIX

A continuation in the rise of optimism underpinned prices on Friday as the environment for risk assets improved with the release of more positive COVID-19 vaccine data and political worries easing. This theme helped support the market throughout the week and month.

This led to a drop in put buying which pressured volatility. The CBOE Volatility Index (VIX), Wall Street’s preferred fear gauge, briefly dipped below 20 for the first time since late February. It later rebounded to trade at 20.84 near the end of the session.

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Retailers Fared Well as Investors Bet on Strong Holiday Shopping Season

Retailers are counting on consumers to splurge after a tough year. But unemployment remains high, so money will be tight for some families that could threaten results. Nonetheless, there was an early encouraging sign from Adobe, which reported record online sales on Thanksgiving Day. Late Friday, it said online sales were on pace to hit another record on Friday, the company predicts Cyber Monday will continue to set a new bar.

Traders responded to the report by driving the SPDR S&P Retail ETF (XRT) higher by 0.9%, helping it reach a new all-time high. Etsy shares popped 10.7%, and GameStop advanced 9%. Amazon shares gained 0.3%, and Shopify climbed 1.5% after Adobe Analytics said Thanksgiving Day online sales rose to a record $5.1 billion.

Chipmakers Rise, Tesla Investors Shrug Off Negative News

Chipmaker stocks, which have been resilient throughout the global health crisis, once again outperformed the broader market.

Tesla Inc built on its recent rally with its shares advancing even as U.S. regulators opened an investigation into front suspension issues in about 115,000 Tesla vehicles.

Finally, shares of Walt Disney Co dipped after the company said it would lay off about 32,000 workers, up from the 28,000 announced previously. Jobs will be cut mainly at Disney’s theme parks.

For a look at all of today’s economic events, check out our economic calendar.

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