Dow Jones, Nasdaq hit record highs after service sector rebound – as it happened

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3.38pm GMT

On Wall Street, the Dow Jones and tech-heavy Nasdaq have surged to fresh record highs after the stronger-than-expected ISM service sector survey. The Dow rose through the 31,000 mark to 31,081, a gain of 0.8%, and the Nasdaq climbed 2.1% to 13,009.

Investors around the world were cheered by confirmation that Democrats have taken control of the US Senate after two crucial wins in elections in Georgia. This prompted the US investment bank Goldman Sachs to upgrade its US growth forecasts, on the assumption of a bigger US stimulus package.

3.25pm GMT

Andrew Hunter, senior US economist at Capital Economics, is somewhat sceptical, saying the unexpected rebound in the ISM services index in December is hard to square with other evidence that shows the second wave of virus cases adn restrictions is starting to weigh more heavily on the economy, particularly services.

Like the manufacturing survey released earlier this week, the headline services reading received an artificial boost from a jump in the supplier deliveries component, which reflects virus-related disruption rather than stronger demand.

The employment index, which fell to 48.2 from 51.5, was the only one to suggest the virus is taking its toll, and lends some support to our forecast that the employment report due tomorrow will show non-farm payrolls falling by 100,000 in December.