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U.S. stock benchmarks opened lower Wednesday, as equities took a breather a day after the S&P 500 index and Nasdaq Composite kicked off December with a new round of records.
What are major benchmarks doing?
- The Dow Jones Industrial Average DJIA, -0.22% shed 195 points, 0.7%, to open near 29,629.
- The S&P 500 SPX, -0.18% lost 15 points, 0.4%, opening near 3,648.
- The Nasdaq Composite COMP, -0.61% fell 0.7% or 88 points, and traded near 12,267.
Stocks ended off session highs on Tuesday, but scored gains that lifted the S&P 500 and Nasdaq to record finishes.
- The Dow rose 185.28 points, or 0.6%, to end at 29,823.90.
- The S&P 500 gained 40.82 points, or 1.1%, to close at 3,662.45.
- The Nasdaq Composite advanced 156.37 points, or 1.3%, to finish at 12,355.11.
What’s driving the market?
Tuesday’s gains built on a historic November rally for stocks tied largely to progress toward COVID-19 vaccines.
On Wednesday, the U.K. granted approval for the vaccine developed by Pfizer Inc. PFE, +3.16% and BioNTech SE BNTX, +7.17% for emergency use.
The pullback in stocks over the past few days is to be expected, said Will Geisdorf, senior research analyst with Sarasota, Florida-based Allegiant Private Advisors. “November was one of the strongest months ever, and now we’re just taking a little pause here.”
“We think there’s still room for this rotation to continue,” Geisdorf told MarketWatch. “Coming out of recessions, small-caps RUT, -0.78% and value stocks typically outperform. Still, in the short term, with this post-Thanksgiving COVID surge, we may have a little bit of a shakeout in December. Look at weakness as an opportunity to add risk.”
Deal-related news was also in focus after Dow component Salesforce.com Inc. CRM, -8.98% late Tuesday announced it would acquire Slack Technologies Inc. WORK, -2.63% in a transaction worth $27.7 billion. Salesforce shares were down 7.3% in early trade, while Slack shares fell 1.7%.
Opinion: Salesforce’s deal for Slack creates a bigger threat to Microsoft
Investors also remain focused on prospects for another round of aid spending from Washington. Hopes were raised Tuesday after a bipartisan group of lawmakers laid out a $908 billion plan, but some disappointment was seen later in the session after Senate Majority Leader Mitch McConnell, R-Ky., who has called for a $500 billion package, said he wanted to pass a “targeted relief package,” according to news reports.
See: Endgame afoot on Capitol Hill as lawmakers mull fiscal stimulus, funding, defense bills
President-elect Joe Biden, in an interview with the New York Times, said he wouldn’t move to immediately remove tariffs placed on Chinese imports by the Trump administration.
Meanwhile, Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will appear before Congress for a second day Wednesday morning.
In U.S. economic data, ADP’s estimate of November private-sector payroll activity found only 307,000 jobs were created during the month, a big miss compared to the Econoday consensus forecast of 420,000 jobs. The Federal Reserve’s so-called Beige Book compilation of economic anecdotes from across the central bank’s regions is due for release at 2 p.m.
Which companies are in focus?
- Pfizer PFE, +3.16% shares were up 2.6% in early trade after the U.K. vaccine news, while American depositary receipts of Germany-based BioNTech were up 6.9%.
- Shares of UnitedHealth Group Inc. UNH, +1.46% were 0.4% higher after the bell after a hefty price-target increase by JPMorgan, to $430, representing more than 26% upside.
- Sequential Brands SQBG, +30.72%, parent company of Jessica Simpson and Joe’s Jeans, among others, said it has relaunched a “broad exploration of strategic alternatives,” which could include a sale, or the divestiture of one or more of its brands. Shares surged 33%.
What are other markets doing?
- The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.949% was virtually unchanged at 0.934%, one day after a big sell-off. Yields and prices move in opposite directions.
- The ICE U.S. Dollar Index DXY, -0.04%, which measures the currency against a basket of six major rivals, was fractionally higher at 91.35.
- In Asia, the Shanghai Composite Index SHCOMP, -0.07% fell 0.1% to close at 3449.38. Hong Kong’s Hang Seng Index HSI, -0.13% also lost 0.1%. Japan’s Nikkei 225 index NIK, +0.05%, advanced 0.1%.
- In Europe, the Stoxx 600 Europe index SXXP, -0.39% was trading 0.5% lower, while London’s FTSE 100 UKX, +0.84%, jumped 0.4%.
- Oil futures fell, with the U.S. benchmark CL.1, +0.69% down 0.3% to $44.42 a barrel as traders awaited an announcement on production from OPEC+. Gold futures GC00, +0.11% rose 0.2% to trade at $1,822.50 an ounce.
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