U.S. stocks have started December strong, with another month of gains expected.
The Dow Jones Industrial Average notched a 400-point gain right out of the gate, while the S&P 500 was up 49 points. Both indices were up more than 1% in early trading in New York. The S&P and the Nasdaq Composite both hit new record highs in early trading to start the month.
More records could be on tap.
November was a record month for U.S. stocks, including a new record-high close above 30,000 points for the Dow Jones, which saw its best month since January 1987. The S&P 500 also rallied in November, notching a record closing high just last week. It was the 26th record closing high for the index. The S&P and the Nasdaq Composite recorded their best monthly gains since April in November.
U.S. equity futures are also strong as continuing news about COVID-19 vaccines keeps investors in a buying mood, according to Fox Business. World stocks are also climbing to start the month. Reuters reports that they climbed to just below record highs following positive factory surveys, which suggested that a recovery from the coronavirus downturn is underway.
Investors are also cheered about drug makers seeking emergency use authorization for their COVID-19 vaccines and central banks looking for continued stimulus. According to CNBC, analyst Tom Lee of Fundstrat Global Advisors wrote that it looks like December will bring a strong finish for the year He cited data from past bull markets when the S&P 500 gained more than 10% in the first 11 months of the year. The index always added to that 11-month gain in December.
Moderating economic recovery
Although investor sentiment is optimistic right now, U.S. Federal Reserve Chairman Jerome Powell warned that the economic outlook in the U.S. is "extraordinarily uncertain." He said the pace of the economic recovery in the U.S. has moderated over the last couple of months as the number of coronavirus cases surges across the country.
According to Fox Business, Powell told the Senate Finance Committee that the economic outlook depends largely on how well the coronavirus can be kept in check. He added that the news about the COVID-19 vaccines is "very positive," but he also expects "significant challenges and uncertainties, including timing, production and distribution, and efficacy across different groups."
Powell added that the Federal Reserve is ready to tap into all of its available tools to support the U.S. economy. Over the last four months, the central bank cut interest rates to close to zero and pledged to keep them there for years. The Fed also injected almost $2.8 trillion into the economy, which was an unprecedented level of stimulus. The central bank's balance sheet has skyrocketed to almost $7 trillion.