US stocks slip from records as wait continues for Congress
NEW YORK, United States (AP) — US stock indexes began slipping from record levels yesterday as the wait drags on to see if Congress can reach a deal to send more cash to struggling workers and businesses.
The S&P 500 was 0.4 per cent lower in midday trading, a day after it and other major indexes returned to record heights. Hope that Congress may be nearing a deal to offer more financial support for the economy has helped put the S&P 500 on track for a 1.2 per cent gain this week, which would more than make up for the prior week’s loss. So has enthusiasm about vaccines for COVID-19, which investors hope will get the economy back on the road to normality next year.
The Dow Jones Industrial Average was down 139 points, or 0.5 per cent, at 30, 163, as of 11:02 am Eastern time, and the Nasdaq composite was 0.1 per cent lower after giving up modest gains from earlier in the morning.
Much of the market’s focus recently has been on Capitol Hill, where momentum has kicked back up for on-andoff-again talks for financial aid for the economy. Negotiations on nearly $1 trillion in relief had seemed to be on the brink of success, but a final agreement has yet to be sealed. The package could include benefits for laid-off workers and cash payments sent to most Americans.
Economists and investors say the need for such action is urgent, as the worsening pandemic tightens its chokehold on the economy. Reports this week showed that more workers are applying for jobless benefits and that sales for retailers slumped by more last month than economists expected.
The rising novel coronavirus counts and deaths are pushing governments around the world to bring back varying degrees of restrictions on businesses, and fear is keeping people and companies away from normal economic activity. The economic damage has mounted, meanwhile, as the deep partisan divide in Washington has prevented Congress from reaching a deal for months.
Wall Street’s hope is that Congress can approve big stimulus for the economy, which could carry it through what’s expected to be a dismal winter, before the widespread roll out of COVID-19 vaccines can help it begin to stand on its own next year.
The nation’s first novel coronavirus vaccine just began being administered this past week, and Vice-president Mike Pence got a shot on live television yesterday in hopes of assuring Americans that it’s safe. That vaccine was developed by Pfizer and Biontech. A second vaccine from Moderna and the National Institutes of Health may also be on the brink of regulatory approval after a government advisory panel endorsed it on Thursday.
Of course, it will be months before most people will be able to get access to a vaccine, and the pandemic is likely to do even more damage in the interim.
Within the S&P 500, Fedex dropped 5 per cent for the sharpest loss in the index, even though it reported stronger revenue and profit for its latest quarter than Wall Street expected. Analysts said some of the weakness may have been due to expectations simply building too high for the company, which has been a winner of the suddenly shopfrom-home economy. Fedex also reported higher costs, including expenses for keeping workers safe from the novel coronavirus.
Shares of Tesla were up 1.2 per cent, ahead of what’s expected to be a torrent of trading activity as it joins the S&P 500, effective Monday. Roughly $4.6 trillion in investments directly mimics the index, and those funds will collectively be adding tens of billions of dollars of Tesla shares, which is set to become one of the 10 biggest stocks in the S&P 500.
Stock markets overseas were making mostly modestly moves.
In Asia, some of the sharpest swings came from Hong Kong, where the Hang Seng index fell 0.7 per cent and shares of Semiconductor Manufacturing International Corp lost 5.2 per cent. The US Commerce Department said yesterday it will restrict exports to China’s top chipmaker, alleging it has ties to the military. The company has previously said it has no ties to the Chinese Government.
It’s the latest escalation in trade tensions between the world’s two largest economies.
The Nikkei 225 slipped 0.2 per cent after Japan’s central bank extended an emergency loan programme by six months and left monetary policy unchanged, as expected. South Korea’s Kospi edged up by 0.1 per cent, and stocks in Shanghai slipped 0.3 per cent.
In Europe, the DAX in Frankfurt was down 0.1 per cent, and the CAC 40 in France fell 0.4 per cent. The FTSE 100 in London slipped 0.2 per cent.
Talks between the United Kingdom and European Union on their trade terms following Brexit are heading into what officials call “the moment of truth”. The European Parliament has set a Sunday night deadline for the negotiations. If they can’t reach a deal, it could cause heavy disruption for businesses.
In the bond market, the yield on the 10-year Treasury ticked up to 0.93 per cent from 0.91 per cent late Thursday.
Earlier this week, the Federal Reserve pledged to keep buying bonds in hopes of supporting the economy until it sees substantial progress made. It also repeated its pledge to keep interest rates at their record low of nearly zero. Such moves have helped underpin the market since the spring, when the Fed stepped forcefully into markets with emergency actions.