Dow and S&P 500 slide from document highs to begin the week amid leaping coronavirus instances
The Dow Jones Industrial Average and S&P 500 fell after a record meeting on Monday as traders worried about rising coronavirus cases and looked for evidence of additional tax subsidies.
The 30-share Dow was trading 142 points lower, or 0.5%. The S&P 500 fell 0.2%. The Nasdaq Composite, meanwhile, rose 0.4% to hit a new record high.
Value stocks, which had suffered a rift recently, lagged behind their growth counterparts on Monday. The iShares Russell 1000 Value ETF (IWD) was down 0.5% and the iShares Russell 1000 Growth ETF (IMF) was up 0.3%.
Intel and Caterpillar were the worst performing Dow stocks, falling 4.2% and 2.8% respectively. The energy sector led the S&P 500 down 1.8%. Facebook rose 2.4% and Apple gained 1.6% to keep the Nasdaq higher. Tesla also added to the Nasdaq’s gains, rising 4.5% to hit an all-time high.
“In the short term, the risk of a modest retreat in the equity markets has increased as the worsening virus situation in the US could lead to an unwinding of the positioning,” Goldman Sachs’ equity strategists wrote in a note on Monday. “While US vaccine approval is imminent, heightened restrictions or stalemates in the US could slow the near-term recovery in economic growth.”
Dr. Deborah Birx warned on Sunday that the escalating coronavirus cases will be “the worst event this country will face, not just on the part of public health”.
More than 2,800 deaths were recorded in the United States on Thursday, a new high, according to Johns Hopkins University. More than 14 million Covid-19 cases and over 282,000 coronavirus-related deaths have been confirmed in the United States. Hospital stays have also reached record levels in the USA
Still, major averages posted intraday and closing all-time highs on Friday, with the Dow bringing in more than 200 points as investors looked to coronavirus vaccines and possibly more tax subsidies. The S&P 500 and Nasdaq Composite gained 0.9% and 0.7%, respectively.
Those gains on Friday came after disappointing US employment data was released. The Department of Labor reported that 245,000 were created in November. Economists polled by Dow Jones had forecast 440,000 more in the past month. However, disappointing pressure gave stocks a boost by raising expectations for a new stimulus package that was passed before the end of the year.
In a tweet on Friday, Chuck Schumer, chairman of the Senate minority, said the report “shows that the need for strong, urgent relief is more important than ever.” President-elect Joe Biden also said the data suggests a “dark winter”.
Those comments followed a bipartisan group of senators who tabled a $ 908 billion aid proposal early last week. Senate Majority Leader Mitch McConnell suspended the move initially, but a spokeswoman for House Speaker Nancy Pelosi later said she and McConnell were discussing their “mutual commitment to complete a bus.” [spending bill] and Covid relief ASAP. “
“At this point in time, the market is anticipating additional stimulus of at least several hundred billion dollars in 2020,” Adam Crisafulli, founder of Vital Knowledge, said in a note. But “while Washington has had a tailwind in late November and early December as fiscal progress has been faster than expected, the whole issue is becoming more neutral (and potentially a headwind if Congress does not meet investor expectations).” “
Legislators had been in a stalemate over additional tax subsidies for months prior to last week and raised concerns about the economic recovery from the coronavirus pandemic.
The rising number of coronavirus cases has led some states and cities to put in place stricter social distancing measures to contain the outbreak.
“Renewed lockdowns in response to the third wave of the pandemic are likely to weigh on the economy in the coming months, but we don’t expect a double decline,” said Ed Yardeni, President and Chief Investment Strategist at Yardeni Research. “The economy could boom next spring if enough of us get vaccinated against the virus.”
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