By Caitlin Ostroff
U.S. stocks wobbled early Thursday, signaling a muted finish to a year that saw the major indexes contract sharply in the spring before snapping back to cinch record highs.
The S&P 500 opened flat and the Dow Jones Industrial Average fell 12 points, less than 0.1%, indicating that gauges may take a breather in the final day of trading for 2020. The Nasdaq Composite index added about 0.1%. Trading volumes have eased this week with many people taking year-end holidays.
The tepid end belies a year that saw stocks bounce back since the March rout despite the economic fallout of the coronavirus pandemic. The unprecedented steps taken by major central banks to bolster credit flow and the increase in governments' spending encouraged investors to focus on growth opportunities despite the economic havoc.
That helped the three major indexes notch 100 record closes so far in 2020, with the Dow hitting its 13th all time finishing high of the year on Wednesday.
"When you look at the entire year, you could say policy makers drowned the black swan," said Carsten Brzeski, global head of macro research at ING Groep.
Fresh data on Thursday showed that 787,000 Americans applied for unemployment benefits for the first time through the week ended Dec. 26, down from 806,000 in the week prior.
The sharp rally in recent weeks reflects investors' optimism about the prospects for next year, Mr. Brzeski said. "There is a hope we will see this synchronized global recovery in 2021."
Money managers are hoping that the widespread rollout of vaccines will allow for the resumption of normal social and business activity, helping accelerate the economic rebound next year. Central banks and governments are also widely expected to continue providing additional support to the economy.
"The market believes, next year, that everything is going to be good," said James Athey, investment manager at Aberdeen Standard Investments. Investors are betting that "equity markets cannot go down because they are underwritten by better growth, more fiscal and more monetary policy. Today's price already includes the good news of tomorrow."
Trading on Thursday is also likely to be particularly muted as money managers hold off on making any big changes to portfolios ahead of the new year. U.S. and European markets will be closed Friday for New Year's Day.
Some of the biggest concerns of the year -- such as hopes for Covid-19 vaccines, uncertainty around the November presidential elections, deteriorating U.S.-China trade relations, and the outcome of the U.K.'s negotiations with the European Union for a new trade deal -- have abated in recent weeks, investors said.
"Everything has settled now," said Mr. Brzeski. "For market participants, this is the moment to relax and recover."
Tribune Publishing rose more than 9% ahead of the market open after The Wall Street Journal reported that a hedge fund that owns a big stake in it is seeking to buy the newspaper chain.
Shares of Enphase Energy rose 1.4% in offhours trading after S&P Dow Jones Indices said that the company will replace Tiffany in the S&P 500 index from Jan. 7. Tiffany is being acquired by LVMH Moet Hennessy-Louis Vuitton.
In bond markets, the yield on the 10-year Treasury note was little changed at 0.925%, compared with 0.926% Wednesday.
Overseas, the pan-continental Stoxx Europe 600 declined 0.4%. The U.K.'s FTSE 100 Index fell 1.5% after the British government announced tougher restrictions across England due to heightened Covid-19 infections.
In Asia, China's Shanghai Composite gained 1.7% by the close of trading, while Hong Kong's Hang Seng ticked up 0.3%.
Write to Caitlin Ostroff at email@example.com
(END) Dow Jones Newswires
December 31, 2020 09:46 ET (14:46 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.