U.S. stocks eke out gains as investors monitor vaccination push, tumult in Washington

• The Nasdaq Composite finished up 65.4 points to end at 12,807.92, leaving it up 0.4%, at a record

• The small-capitalization Russell 2000 index
  RUT
  gained 19.55 points, or 1%, to end at a record at 1,989.88.

• The S&P 500 index finished lower for a third straight session, off 7.66 points, or 0.2%, at 3,687.26,

• The Dow fell 200.94 points, or 0.7%, to finish at 30,015.51,

What drove the market?

U.S. stock indexes closed mostly higher, after losing stem in the final hour of trade after President Trump vetoed an annual military spending package passed by Congress, potentially setting up the first override vote of his presidency. Trump’s said he wants to see the bill include limits on social media companies that he claimed are biased against him.

The veto followed Trump’s criticism late Tuesday of a $900 billion relief bill passed by Congress on Monday, calling it an “unsuitable disgrace.” If Trump vetoes the aid bill or fails to sign it into law by a Dec. 28 deadline, it could throw into disarray months of negotiations on fiscal aid for unemployed Americans and troubled businesses. Trump is advocating for checks to households of $2,000 rather than the $600 that is currently a part of the new relief bill.

Read: Trump could veto the coronavirus aid bill. Here’s what’s next

The growing rancor between the White House and Congress comes in the final weeks of the Trump administration, as the U.S. works to ramp up its vaccination program, COVID-19 deaths surge and as economic data has been mixed.

Undervalued cyclical stocks, sensitive to a slowly recovering U.S. economy, led stock gains Wednesday. Financials sector stocks in the S&P 500 rose 1.6% and energy stocks advanced 2.2%.

“The greatest boost to the market is going to be the fact that these vaccines are going to ambush what has been the kiss of death for the economy for the past year,” said Eric Schiffer, chief executive officer of private-equity firm Patriarch Organization, of the pandemic.

“I think next year looks good overall for stocks,” he told MarketWatch, even if there are “short term hurdles” to getting additional pandemic stimulus to struggling U.S. households, businesses, cities and states.

Wall Street trading volumes were thinner in the short Christmas week, despite a number of developments on the coronavirus aid bill passed by Congress on Monday.

The number of COVID deaths spiked up to 3,239 on Tuesday, representing the third-highest daily total ever, from 1,962 on Monday, according to data provided by the New York Times. Hospitalizations jumped by 2,426 patients to a record 117,777 on Tuesday, COVID Tracking Project data show. The U.S. so far has vaccinated more than 1 million people, the Centers for Disease Control and Prevention said.

Markets have been trading in a range near record highs ever since mid-November, and any hopes that a better-than-expected stimulus package would jolt stocks higher fell by the wayside this week, noted Andrew Smith, chief investment strategist of Dallas-based Delos Capital Advisors.

“There’s a feeling of, ‘finally, it’s done,’ but there was really nothing in there that helps states and municipalities, and the unemployment benefits only last until March,” Smith said in an interview. “That Santa Claus rally we typically get? I’m sorry, but this isn’t helping.”

Smith thinks that eventually investors may shake off some of the lingering concerns that have built up over the past few weeks but it’s just as likely markets will see a slight correction before that happens, he said.

Market participants have been uneasy this week in part because of reports of new variant strains of coronavirus, leading to intensified lockdowns in parts of Europe to limit contagion. In Europe, France reopened its border with the U.K. on Wednesday following a ban aimed at preventing the new strain from entering the country.

Medical experts say vaccines rolled out recently from Pfizer
PFE
and German partner BioNTech
BNTX,
as well as from Moderna
MRNA
should be effective against the new virus strain. Early Wednesday, Pfizer confirmed a report that the U.S. had paid for an additional 100 million of its two-dose vaccine. Canada also authorized Moderna’s vaccine.

In Europe, stocks closed higher on Wednesday amid reports that a Brexit trade deal was imminent. The Treasury yield curve steepened, and the pound rose.

U.S. economic data out Wednesday was mixed. There were 803,000 applications for jobless benefits in the most recent week, a decline of 89,000 from the prior week though the labor market overall remains weak. Personal incomes slid 1.1% in November and consumer pending fell 0.4%, as did the Michigan Consumer Sentiment reading, and new home sales. But durable goods orders rose for a seventh straight month though signs of a slowdown are emerging.

Which stocks were in focus?

Walmart Inc.
WMT
shares edged 0.7% lower, after the Trump administration sued the retailer, claiming it ignored warnings from its own pharmacist and inadequately screened questionable prescriptions that fueled the opioid crisis.

XL Fleet
XL
shares soared 86% Wednesday, even without a clear catalysts for the surge for the hybrid and electric powertrain provider for commercial vehicles.

Shares of Palantir Technologies Inc.
PLTR
were in focus on Wednesday, after the big-data software company said it signed a new two-year contract with the U.K.’s National Health Service.

Shares of Tesla Inc.
TSLA
 slipped early Wednesday before reversing to gain 0.9%.

Highflying electric vehicle-maker Nikola
NKLA
saw shares slid 10.7% after an order cancellation.

Supernus Pharmaceuticals Inc.‘s stock
SUPN
 rose 14.6% after the company late Tuesday revealed positive results from a study of its potential drug for attention-deficit hyperactivity disorder, or ADHD.

How are other assets fare?

• In Asian trading, the Shanghai Composite
  CN:SHCOMP
   rose 0.8%, Hong Kong’s Hang Seng Index
  HK:HSI
  gained 0.9% and Japan’s Nikkei 225
  JP:NIK
   closed up a modest 0.3%.

• In Europe, the Stoxx 600 Europe
  XX:SXXP
   closed 1.1% higher, while London’s FTSE 100 index
  UK:UKX
  rose 0.7%.

• The 10-year Treasury note yield
  BX:TMUBMUSD10Y
  added 3.6 basis points to around 0.953% after Brexit progress reports. Yields and prices move in opposite directions.

• Oil futures gained, with the U.S. benchmark trading
  CL

  CL00
  up $1.10, or 2.3% to settle at $48.12 a barrel on the New York Mercantile Exchange,

• Gold futures for February delivery
  GCG21
   closed 0.4% higher at $1,878.10, halting a 3-session slide.

• A gauge of the U.S. dollar, the ICE U.S. Dollar Index
  DXY,
  fell 0.4% to 90.34.

Andrea Riquier contributed reporting