U.S. Stocks Notch Records in Final Trading Day of 2020

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Source: FactSet

U.S. stocks spent the final session of the most tumultuous year in recent memory doing something that became routine in 2020: setting records.

The Dow Jones Industrial Average rose 196.92 points, or 0.7%, to 30606.48, recording its 14th record close of 2020 after a relatively muted session ahead of the year-end holiday.

The S&P 500 recorded its 33rd record of the year, rising 24.03 points, or 0.6%, to 3756.07. The Nasdaq Composite added 18.28 points, or 0.1%, to 12888.28—missing its 56th record close by about 10 points.

In the end, the three major indexes notched more than 100 record closes in 2020, and finished a chaotic year in winning fashion. The Dow rose 7.2% for 2020. The S&P 500 jumped 16%, the Russell 2000 index of smaller-cap stocks gained 18%, and the Nasdaq surged 44%.

Adding those gains to 2019 gave the S&P and Nasdaq their best two-year runs since 1998 and 1999, the height of the dot-com boom. For the Dow industrials, it has been the best two-year run since 2017.

Given the year’s challenges, many investors’ good fortune has “left them scratching their heads,” said Michael Arone, a strategist at State Street Global Advisors. The run has come with corporate earnings down in both years and revenue growth flat.

“That I think is amazing,” he said.

The final session ended a frantic year that saw stocks rally back from their March rout, despite the economic fallout of the coronavirus pandemic. The unprecedented steps taken by governments and central banks to support economies encouraged investors to focus on prospects for growth despite the economic havoc.

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.

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.

“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.

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.”

Riskier assets and momentum driven stocks skyrocketed, along with big tech stocks. Tesla Inc. soared 743% this year. Zoom Video Communications Inc. gained 396%. Apple rose 81%. Amazon added 76%.

The iShares iBoxx junk-bond exchange-traded fund added 4.1% for the year. The digital currency bitcoin rose a blistering 300% and traded over $29,000 for the first time in its history on Thursday.

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.”

The Nasdaq Composite Index wrapped up its best annual performance since 2009.

Photo: Michael Nagle/Bloomberg News

Tribune Publishing Co. rose 7.1% to $13.70 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 Inc. rose 1.5% to $175.47 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 fell to 0.913%, compared with 0.926% Wednesday. It dropped fell nearly a full percentage point in 2020, its largest one-year fall since 2011 and its second consecutive yearly decline.

Gold closed out 2020 at $1,893, up 25%. That was the metal’s best yearly percentage gain since 2010. Gold’s 48% rise over 2019 and 2020 marks its best two-year run since 2010.

One of the few losing assets this year was oil. Nymex crude fell 21% to $48.52, its worst one-year fall since 2018, and clinching the second losing year out of the past three.

Overseas, the pan-continental Stoxx Europe 600 declined 0.3%. 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%.

Investors have been pouring more money than ever into renewable energies such as solar and wind. WSJ looks at how the pandemic, lower energy costs and global politics have driven the rally—and whether it can last.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Paul Vigna at paul.vigna@wsj.com

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