The Dow Jones Industrial Average traded 306 points higher, or 1%. The S&P 500 climbed 0.9%, and the Nasdaq Composite rose 0.4%. All three major indexes hit record highs.
Trump signed a $900 billion Covid-19 relief bill into law, averting a government shutdown and extending unemployment benefits to millions of Americans. The signing came days after Trump suggested he would veto the legislation, demanding $2,000 direct payments to Americans, instead of $600.
“All the bluster neither significantly changed to outlook for stocks, as markets still expected (and ultimately received) stimulus of a minimum of $900 billion to pass,” wrote Tom Essaye, founder of The Sevens Report.
“The five pillars of the rally (Federal stimulus, FOMC stimulus, vaccine rollout, divided government and no double dip-recession) re-main largely in place, and until that changes, the medium and longer-term outlook for stocks will be positive,” Essaye added.
Apple led the Dow higher, rising 2.2%. Goldman Sachs and Disney also rose more than 2%. Energy, tech and financials each rose more than 1% to lift the S&P 500.
Traders also sold Treasurys, pushing yields higher, in favor of riskier assets such as stocks. The benchmark 10-year note yield climbed to 0.95%.
Wall Street is coming off a quiet holiday week where the major averages were flat. The S&P 500 fell 0.2% last week as some investors took the chips off into the year-end. The 30-stock Dow eked out a 0.1% gain for the same period.
Profit-taking could ramp up in the final week of the year, which has so far seen surprisingly strong returns. The S&P 500 has gained 15.4% year to date, while the Dow has climbed 6.4%. The Nasdaq has soared 43.2% this year as investors favored high-growth technology names during the ongoing Covid-19 pandemic.