Stocks hold on to modest gains, Dow marks another record
Stocks eked out modest gains Wednesday, keeping the major stock indexes on Wall Street at or near record highs.
The S&P 500 inched up 0.1%, recovering some of its losses from a day earlier. It’s hovering within 0.1% of the record high it set on Monday. The Dow Jones Industrial Average closed just above its own all-time high from Monday.
Energy and materials companies led the gains. Industrial and financial stocks also had a strong showing. Communication services stocks fell the most. Roughly 73% of stocks in the S&P 500 rose. Treasury yields mostly fell.
Small-company stocks again outpaced their larger rivals, a sign that investors are feeling more optimistic about the economy.
Stocks have been mostly grinding higher in recent weeks, with indexes setting new highs, amid optimism that coronavirus vaccinations will pave the way in coming months for the economy to escape from the pandemic’s grip.
“This is overall a market that’s setting the stage for 2021 and looking at an economy that is going to normalize, albeit at a probably slower pace than initially projected,” said Quincy Krosby, chief market strategist at Prudential Financial.
The S&P 500 index rose 5 points to 3,732.04. The Dow gained 73.89 points, or 0.2%, to 30,409.56. The Nasdaq composite picked up 19.78 points, or 0.2%, to 12,870. The Russell 2000 index of smaller companies climbed 20.63 points, or 1.1%, to 1,979.99.
Ahead of the final day of trading in 2020, the S&P 500 is up 15.5% this year, while the Nasdaq is up 43.4%.
Prosecutors seek 9-year prison term for Samsung chief Lee
SEOUL, South Korea — South Korean prosecutors on Wednesday requested a nine-year prison term for Samsung’s de facto chief, Lee Jae-yong, during his bribery retrial, where Lee apologized and vowed not to be implicated in similar allegations in an apparent plea for leniency.
The case is a key element in an explosive 2016 scandal that triggered months of public protests and toppled South Korea’s president. A ruling on Lee could send him back to prison on charges that he bribed former President Park Geun-hye and her longtime confidante to get the government’s backing for his push to solidify his control over Samsung.
The retrial comes as Lee faces immense pressure to navigate Samsung’s transition after his father and Samsung Electronics Chairman Lee Kun-Hee died in October.
A team of prosecutors led by independent counsel Park Young-soo demanded the Seoul High Court sentence Lee to prison. They said Samsung “more actively sought unjust benefits” than other businesses with regard to the 2016 scandal. The prosecutors said Samsung, which is South Korea’s biggest company, should “set the example” for efforts to root out corruption.
“Samsung is a business group with overwhelming power, and there is even a saying that South Korean companies are divided into Samsung and non-Samsung ones,” the prosecutors said in closing comments. “The rule of law and the egalitarianism principle … are meant to punish those in power and those with the economic power in line with the equal standard.”
Prosecutors also asked the court to sentence three former Samsung executives to seven years in prison and another former executive to five years.
Lee, 52, vice chairman of Samsung Electronics, was sentenced in 2017 to five years in prison for offering $7 million in bribes to Park and her longtime confidante Choi Soon-sil. But he was freed in early 2018 after the Seoul High Court reduced his term to 2½ years and suspended his sentence, overturning key convictions and reducing the amount of his bribes.
Last year, the Supreme Court returned the case to the high court, ruling that the amount of Lee’s bribes had been undervalued. It said the money that Samsung spent to purchase three racehorses used by Choi’s equestrian daughter and fund a winter sports foundation run by Choi’s niece should also be considered bribes.
During Wednesday’s court session, Lee’s lawyers said the basic nature of the 2016 scandal was about ex-President Park’s abuse of power that infringed upon the freedom and property rights of businesses. The lawyers said Lee and the other ex-Samsung executives embroiled in the scandal weren’t able to resist the pressure by Park and Choi and that they and Samsung didn’t receive any special favors from Park’s government.
Lee apologized over the case, saying that “everything is my fault” and that “I deeply repent and am ashamed of myself.” Lee said he’ll never engage in any activity that can cause misunderstanding and pledged to focus on making contribution to South Korean society.
Lee also reiterated his earlier promise not to pass the management rights to his children and to stop suppressing employee attempts to organize unions.
The Seoul High Court is to issue a ruling on Jan. 18, according to South Korean media reports.
EU, China leaders seal long-awaited deal
BRUSSELS — Top European Union officials and Chinese President Xi Jinping concluded a business investment deal Wednesday that will open big opportunities to European companies, but has the potential to irk the new American administration.
Amid concerns about the human rights situation in China, the EU said the seven-year-long negotiations were concluded in “principle” during a videoconference involving Xi, European Commission president Ursula von der Leyen and EU Council president Charles Michel.
German Chancellor Angela Merkel — whose country holds the rotating presidency of the EU — and French president Emmanuel Macron also took part in the discussions with the Chinese president, the EU said.
“We are open for business but we are attached to reciprocity, level playing field and values,” von der Leyen said.
The videoconference launches a ratification process that will take several months. To enter into force, the agreement will need to be ratified by the European Parliament, and the issue of human rights could be a sticking point.
According to EU figures, China is the bloc’s second-biggest trading partner behind the United States, and the EU is China’s biggest trading partner.
According to the EU, the deal was brokered after China committed to pursue ratification of the International Labor Organization’s rules on forced labor.
On Tuesday, the EU expressed concerns about “the restrictions on freedom of expression, on access to information, and intimidation and surveillance of journalists, as well as detentions, trials and sentencing of human rights defenders, lawyers, and intellectuals in China.”
The EU hopes the agreement, known as CAI, will help correct an imbalance in market access and create new investment opportunities for European companies in China by ensuring they can compete on an equal footing when operating in the country.
The 27-nation bloc said the agreement is the most ambitious that China has ever agreed with a third country and will give additional access to many areas including the electric cars and hybrid vehicles sector, as well as private hospitals, telecoms and cloud services.
But it has the potential to cause tension with the administration of U.S. President-elect Joe Biden only weeks after the EU proposed a trans-Atlantic dialogue to address “the strategic challenge presented by China’s growing international assertiveness.”
The EU, however, said the investment agreement will give the EU the same level of market access in China that the United States has and insisted that the deal will benefit other trading partners by getting China to commit to high standards of conduct.
The EU previously said the agreement, which includes provisions for settling disputes, should increase the transparency of Chinese state subsidies and make sustainable development a key element of the relationship between the EU and China.
The deal also includes clear rules against the forced transfer of technologies, a practice in which a government requires foreign investors to share their technology in exchange for market access.
Contract signings for homes reach new high
SILVER SPRING, Md. — The number of Americans who signed contracts to buy homes declined last month, but was a record high for November when a seasonal slowdown traditionally seeps into the real estate market.
The National Association of Realtors said Wednesday that its index of pending sales fell 2.6% to 125.7 in November, down from October’s revised reading of 129.1. An index of 100 represents the level of contract activity in 2001. It was the third straight monthly decline.
Contract signings are a barometer of finished purchases during the next two months, so the report could preview what could be a strong winter for the housing market.
Contract signings are 16.4% ahead of where they were last year, thanks to a big summer rebound that followed a spring washout due to the coronavirus outbreak. Contract signings in all four regions — the Northeast, South, Midwest and West — declined from October to November but are up double-digits year-over-year through last month.
Historically low interest rates are drawing prospective buyers into the market, but home prices have risen significantly the past year as supply remains near all-time lows.
U.S. home prices jumped 7.9% in October, the most June 2014, according to S&P CoreLogic Case-Shiller 20-city home price index released Tuesday.
Mortgage finance giant Freddie Mac reported last week that the average rate on the 30-year fixed-rate home loan remained at a record low 2.66%.