U.S. stock indexes lacked direction on Tuesday as investors worried about a new strain of COVID-19 and the impact of lockdowns in the U.K. and other countries, after Washington lawmakers hurried through a $900 billion coronavirus aid package for households and businesses.
How are equity benchmarks performing?
-
The Dow Jones Industrial Average
DJIA,
was off 159 points, or 0.5%, at 30,057. -
The S&P 500 index
SPX,
was down 6 points to reach 3,689, a decline of 0.2%. -
The Nasdaq Composite Index
COMP,
rose 53 to 12,794, leaving it up 0.4%, after an early push higher took the index to an intraday record at 12,840.57.
On Monday, markets finished mostly lower but not before a major comeback:
- The Dow closed 37.40 point, or 0.1%, higher at 30,216.45, after touching an intraday low of 29,755.53.
- The S&P 500 index slid 14.49 points, or 0.4%, to end at 3,694.92.
- The Nasdaq Composite Index closed 13.12 points, or 0.1%, lower at 12,742.52.
What’s driving the market?
U.S. stocks were mixed Tuesday afternoon as uncertainty about a new strain of coronavirus in the U.K. and other parts of the world shifted investors’ focus onto equity valuations and the economic outlook for 2021.
Limiting losses, though, was the passage of a coronavirus aid package by Congress, though there were questions about how much of the deal was already into the market’s recent rally.
“U.S. stocks are entering holiday mode as concerns over a virus variant temper a humble rebound that stemmed from the approval of a fiscal relief bill,” said Edward Moya, senior market analyst at Oanda, in a note.
President Trump is expected to sign another coronavirus aid package into law after the Senate and House voted late Monday to approve the $900 billion plan and a $1.4 trillion spending bill that will fund the government through September 2021. The Senate passed the fiscal spending bill 92-6 while the House approved it in a 359-53 vote late Monday.
Angst over a variant of the coronavirus that causes COVID-19 started over the weekend. Some medical experts, however, have said that vaccines should remain effective against the disease. President-elect Joe Biden received a vaccine during an on-camera event on Monday.
In the U.S. there were 201,723 new COVID-19 cases reported in the U.S. on Monday, up from 179,801 on Sunday, according to data provided by the New York Times.
“On the eve of 2021, the economy carries very little momentum as a catastrophic third Covid wave is limiting mobility, curbing employment and constraining demand,” wrote Gregory Daco, chief U.S. economist at Oxford Economics in a Tuesday research note.
“The $900bn fiscal aid package is months late and will likely fall short of what is needed to prevent a rough winter, but it’s better than nothing,” the economist wrote.
In economic news, a final reading of U.S. gross domestic product in third quarter came in at a slightly stronger rate than had been estimated by economists surveyed by MarketWatch, at an annualized growth rate of 33.4% compared with a previous reading of 33.1%, as the economy claws back from pandemic lows.
“The third read on GDP this morning isn’t too surprising, but it is encouraging,” wrote Mike Loewengart, managing director and investment strategist at E-Trade Financial, in a Tuesday note.
“While these numbers aren’t reflective of the here and now, they show the resiliency of the economy. But we know things have changed pretty drastically in Q4, so all eyes will be on where GDP shakes out in the new year,” the strategist said.
“With stimulus on the horizon, we could see a boost in consumer spending that could fuel GDP growth, but it remains to be seen if pandemic relief is too little too late,” he said.
After two quarters of distorted GDP data though, the economy is seen returning to a somewhat more normal growth rate in the fourth quarter of 2020. Economists are expecting growth at a 3.5% annualized rate in the fourth quarter.
But other data painted a less-than-stellar outlook for the economy, with U.S. existing home sales dropping 2.5% to 6.69 million rate in November and a reading of consumer confidence falling to 88.6 in December from revised 92.9 in prior month.
Which stocks are in focus?
-
Apple Inc.
AAPL,
shares were up 2.9% after a report that the tech giant is targeting 2024 as the year it produces a passenger vehicle. -
Shares of Sportsman’s Warehouse Holdings Inc.
SPWH,
were surging 39% after news on Monday that it is being acquired by privately held Great American Outdoors Group, which already owns Bass Pro Shops, Cabela’s, White River Marine Group and nature-based resorts. -
Shares of Peloton Interactive Inc.
PTON,
were up over 11% after it announced Monday afternoon that it is acquiring another manufacturer of exercise equipment, Precor, at a valuation of $420 million. -
Tesla shares
TSLA,
were off less than 3% during the electric-vehicle maker’s second session as an S&P 500 index constituent. -
Shares of Google parent Alphabet Inc. and Facebook were in focus after the pair agreed to team to fight antitrust lawsuits. Shares of Facebook
FB,
were off 2.5% while Alphabet shares
GOOG,
GOOGL,
were down 1.2%.
How are other assets performing?
-
In Asian trading, the Shanghai Composite
SHCOMP,
shed 1.9%, Hong Kong’s Hang Seng Index
HSI,
lost 0.7% and Japan’s Nikkei 225 declined 1%. -
In Europe, the Stoxx 600 Europe
SXXP,
closed 1.2% higher, following its largest one-day percent plunge in about two months, while London’s FTSE 100 index
UKX,
picked up 0.6%. -
The 10-year Treasury note yield
TMUBMUSD10Y,
was sliding at 0.92%. Yields and prices move in opposite directions. -
Oil futures retreated, with the U.S. benchmark
CL.1,
down 2% to settle at $47.02 a barrel, after a sharp drop on Monday. -
Gold futures for February delivery
GCG21,
were 0.6% lower to settle at $1,870.30 an ounce. Meanwhile, a gauge of the U.S. dollar, the ICE U.S. Dollar Index
DXY,
,
rose 0.7%.