Dow climbs 310 points as investors cheer transition to Biden administration

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  • US equities gained on Tuesday as the General Services Administration’s ascertainment of a Biden victory lifted investor sentiments.
  • The GSA announced Monday afternoon it will provide President-elect Biden with the “resources and services” needed to start his transition to the White House. The move is the clearest sign yet that the Trump campaign accepts its loss in the 2020 race.
  • Value and cyclical stocks outperformed as the GSA’s decision diminished election-related uncertainties.
  • Bitcoin surged above $US19,000 for the first time since 2017 and closed in on its all-time high of roughly $US19,700.
  • Oil futures erased most of their pandemic-induced losses and hit their highest levels since March. West Texas Intermediate crude jumped as much as 1.6%, to $US43.75 per barrel.
  • Watch major indexes update live here.

US stocks jumped on Tuesday as the start of the transition to a Biden administration spurred another rotation to cyclical stocks.

The General Services Administration will provide President-elect Joe Biden with the “resources and services” necessary to begin his transition to the White House, Emily Murphy, the agency’s administrator, said in a Monday letter.

The ascertainment — typically a controversy-free process — comes more than two weeks after major news outlets called the election for Biden. The process has been largely delayed by President Donald Trump’s legal challenges to the election’s outcome.

The move is the closest the Trump administration has come to conceding defeat and diminishes political uncertainties still lingering from Election Day. Still, President Donald Trump indicated in a Monday tweet that his legal fights will continue.

Here’s where US indexes stood shortly after the 9:30 a.m. ET market open on Tuesday:

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Value and cyclical stocks outperformed as investors boosted bets on sectors hit hardest by the coronavirus. Tech giants lagged the upswing and led the Nasdaq composite to underperform.

Tuesday’s gains follow a similarly fruitful session to start the week. Stocks climbed on Monday following reports that President-elect Biden will pick former Federal Reserve Chair Janet Yellen as his Treasury Secretary. Yellen, if confirmed, will be the first woman to hold the position. A positive update from AstraZeneca’s coronavirus vaccine trials bolstered investor sentiments earlier in the day.

“Signs of movement in the US political deadlock have combined with the steady drip of vaccine news to underpin a market that has yet to breach the highs seen earlier in the month,” Chris Beauchamp, chief market analyst at IG, said, adding the news builds encouraging momentum for stocks to climb further through December.

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Bitcoin ripped above $US19,000 for the first time since 2017, bringing the token just below its all-time high of roughly $US19,700. The world’s most popular cryptocurrency continues to rally as both Wall Street and Main Street show new interest in digital tokens and their possible use cases. The rally also lifted peer cryptocurrencies including Ethereum and XRP.

The shift away from safe-haven and hedging assets dragged gold prices to their lowest since July. The precious metal fell as much as 1.9%, to $US1,802.44 per ounce, at intraday lows.

The US dollar weakened against a basket of Group-of-10 peers as Yellen’s appointment spurred fresh hopes for outsized fiscal stimulus. Treasury yields wavered.

Oil futures hit their highest levels since March on lasting vaccine optimism. West Texas Intermediate crude jumped as much as 2%, to $US43.94 per barrel. Brent crude, oil’s international benchmark, gained 1.9%, to $US46.91 per barrel, at intraday highs.

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