U.S. Stocks Rise as Dow Hits Record
How the pandemic drove massive stock market gains, and what happens next in 2021. Tesla could deliver one million cars by 2022 on 'eye-popping demand' from China.

The Dow Jones Industrial Average clinched its 13th record close of the year Wednesday, lifted by a climb in Walt Disney shares and bets on rapid economic recovery.
The recent signing of a coronavirus aid bill and rollout of vaccines have bolstered expectations that the economy will quickly rebound from the pandemic, fueling gains in everything from entertainment companies to raw materials producers.
The Dow Jones Industrial Average added 73.89 points, or 0.24%, to 30,409.56. The S&P 500 advanced 5.00 points, or 0.13%, to 3,732.04 and the Nasdaq Composite gained 19.78 points, or 0.15%, to 12,870.00.
Apple (AAPL-US) fell 0.85%; Facebook (FB-US) fell 1.77%; Alphabet (GOOGL-US) fell 1.22%; Amazon (AMZN-US) fell 1.09%; Microsoft (MSFT-US) fell 1.10%.
Qualcomm (QCOM-US) rose 0.98%; AMD (AMD-US) rose 1.84%; NVIDIA (NVDA-US) rose 1.56%; Micron (MU-US) rose 2.44%.
Tesla (TSLA-US) rose 4.32% to a record high of $694.78 per share.
Tesla is likely to hit its 500,000 delivery target this year as robust deliveries in the fourth quarter are in part driven by pent-up demand from China, Wedbush analyst Daniel Ives said in a note on Wednesday.
Very few expected Tesla to hit its annual target earlier this year as the electric vehicle manufacturer had to halt production for nearly two months at its Fremont, CA factory due to the COVID-19 pandemic.
And by 2022, Tesla could deliver one million units, driven by a major inflection point in global electric vehicle adoption, "eye-popping demand" from China, and the potential for increased EV credits from the Biden administration, according to the note.
Ives reiterated Tesla's Neutral rating with a price target of $715 and a bull case price target of $1,000, representing potential upside of 7% and 50% from Wednesday's close, respectively.
Disney rose more than 2% to lead the Dow higher. Energy and materials were the best-performing sectors in the S&P 500, jumping more than 1% each.
Wednesday's move higher came after a British regulator approved a coronavirus vaccine developed by the University of Oxford and AstraZeneca for emergency use. The approval followed the discovery of a new Covid strain in the U.K., which has also been confirmed in the U.S. AstraZeneca shares climbed 0.6%.
Wall Street also weighed the prospects of greater coronavirus relief as lawmakers continued to disagree over direct payments to Americans.
The Senate currently has no plans to vote on a bill that would increase checks to $2,000 from $600. That measure was passed by the House late Monday. However, Senate Majority Leader Mitch McConnell introduced another bill that ties the increased payments to demands from President Donald Trump on tech and the election.
Stimulus payments started to go out Tuesday evening, Treasury Secretary Steven Mnuchin said.
Why a pullback could be lurking in 2021
The spread of Covid-19 crushed the stock market when it became clear it would cause a rapid and historic drop in economic output.
As the economy bounced back, the recovery was choppy, millions remain unemployed, and yet the stock market has surged to record highs.
Many small businesses are struggling, and more than 10.7 million people are unemployed, according to Labor Department monthly data.
The S&P 500 is up more than 65% since the March low, and nearly 16% for the year. The Nasdaq is 44% higher for the year.
But strategists say the market valuations have become distorted and are likely to see a pullback in early 2021 though stocks should end the year higher.
"There's always a weird dichotomy between stocks and the economy except in the initial stages of a recession, when the economy falls sharply. The initial news that the economy is crumbling seems to crush the stock market, but the recovery is much longer for the economy than it is for stocks," said Chris Rupkey, chief financial economist at MUFG Union Bank.
"The only difference in this stock market is the stock indexes have gotten to levels that are at values we almost haven't seen before. We haven't seen valuations since before the internet stock market bubble in the late 1990s," he added. "It's OK for stocks to be here if companies are going to make a lot of money next year."
Rupkey said investors point to the last recovery in 2009 and note stocks moved higher ahead of the economic recovery. But he noted that at the time, valuations were rising into the teens, not above 30.
The way investors look at the market has also changed, and that may be a direct result of how the pandemic has impacted the economy.
"Typically, when we go through economic downturns, people drift to consumer staples, utilities, and health care. In a traditional downturn, you went defensive," said Tobias Levkovich, chief U.S. equity strategist at Citigroup. Utilities are negative on the year, down about 5%; consumer staples are up 6.9% and health care is up 10%.
Levkovich also says it would not be surprising to see the rapidly rising market pullback in the new year. He said a 10% to 12% retracement is possible.
"The 'defensive' in the Covid world became who could grow in an economy where there is no growth," said Levkovich. That would be like e-commerce, or Amazon, which is up 80% for the year.
"Defensive meant bulletproof balance sheets with free cash flow, and you ended up buying mega-cap tech," Levkovich said. The S&P information technology sector is up nearly 42% for the year, the best-performing of the major sectors.
"All in one fell swoop, mega-cap was large-cap, mega-cap was defensive and mega-cap was growth," he said.
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