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U.S. stocks lost steam Wednesday, after setting a fresh round of intraday records on opening, as investors awaited word on whether Congress would pass another coronavirus relief package to limit the economic harm from the COVID-19 pandemic, while waiting for a vaccine rollout.
How are stock benchmarks performing?
- The Dow Jones Industrial Average DJIA, -0.14% fell 68 points, 0.2%, to trade near 30,108.
- The S&P 500 index SPX, -0.18% lost 7 points, 0.2%, and traded near 3,694.
- The Nasdaq Composite COMP, -0.35% lost 31 points, 0.3%, to about 12,551.
On Tuesday, the S&P 500 registered its 30th closing high of 2020 and the Nasdaq notched its 50th.
- The Dow rose 104.09 points, or 0.4%, to end at 30,173.88.
- The S&P 500 index was up 10.29 points, or 0.3%, to finish at 3,702.25, surpassing its previous closing high of 3699.12 set last Friday.
- The Nasdaq Composite Index climbed 62.83 points, or 0.5%, to 12,582.77, setting a new closing record.
What’s driving the market?
Investors are focused on the probability of another round of coronavirus relief aid after U.S. Treasury Secretary Steven Mnuchin proposed a $916 billion package on Tuesday, though Democrats rejected Senate Majority Leader Mitch McConnell’s efforts to narrow the scope of a $908 billion bipartisan proposal.
The Trump administration’s new offer includes $160 billion in aid for state and local governments, as well as liability protection for businesses and stimulus checks for adults and children, according to reports by Bloomberg and the Washington Post.
The focus on fiscal aid comes as the global tally of COVID-19 rose above 68 million on Wednesday, according to data aggregated by Johns Hopkins University, while the death toll rose above 1.55 million. The U.S. has the highest case tally in the world at 15.2 million and the highest death toll at 286,338, or more than a fifth of the global total. There were 219,944 new cases on Tuesday, and at least 2,597 people died, according to a New York Times tracker.
Despite positive signals on the horizon, some investors are wary. “I still think there’s a potential for some kind of bolt from the blue surprise,” said Peter Andersen, founder of Andersen Capital Management. “I’m very cautious. There are still some questions to be answered. I’m hoping we have a smooth end to December.”
Andersen is bullish over the long-term, he said in an interview. Once past some of the near-term headwinds, “I think 2021 is going to be one of the historic years for recovery, up there with the end of major wars. We’re already seeing enormous demand from consumers. Can you imagine when we get a semi-all clear and we’re moving back toward normalcy?”
One of those near-term hurdles is negotiations over another round of government aid.
“Lawmakers in Congress aren’t exactly on the same page, with regards to the kind of stimulus that’s needed beyond the end of the year, but one thing they’re clearly in agreement on is the essential need for an extension of relief. And one that’s tied to funding for government.” wrote Craig Erlam, senior market analyst at Oanda, in a note.
Investors are waiting for a Food and Drug Administration meeting scheduled to take place Thursday as the next step toward the likely authorization of the BioNTech BNTX, -1.00% and Pfizer Inc.’s PFE, -0.75% experimental COVID-19 vaccine, which began to be distributed to vulnerable populations in the U.K. on Tuesday. A similar FDA meeting for Moderna Inc.’s MRNA, -2.50% vaccine candidate is set for Dec. 17.
U.K. Prime Minister Boris Johnson is expected to arrive in Brussels later Wednesday to meet European Commission President Ursula von der Leyen, in a bid to secure a post-Brexit trade deal. Fears of a ‘no-deal’ scenario when the transition period ends on Dec. 31 weighed on stocks and the British pound GBPUSD, +0.25% on Tuesday.
Read: Germany’s Merkel pushes for tougher COVID-19 rules as daily death toll hits a record
Job openings rose in October, the U.S. Labor Department said Wednesday morning, but layoffs rose more quickly.
Which stocks are in focus?
- DoorDash Inc. DASH, is expected to begin trading Wednesday on the New York Stock Exchange under the ticker “DASH.”
- Vera Bradley VRA, -11.07% shares slumped 11.3% after the company’s results fell short of analyst expectations and management declined to offer guidance because of uncertainty caused by the pandemic.
- FireEye Inc. FEYE, -10.99% shares slid more than 11% midday after the cybersecurity company late Tuesday said sophisticated hackers accessed its tools used to test its customers’ security.
- Tempur Sealy International Inc. TPX, +1.18% is set to invest $150 million in next three years for growth initiatives and targets $280 million in buybacks.
- Shares of Campbell Soup Co. CPB, -2.05% were 1.2% lower in trade even after the food company blew away analyst expectations in the most recent quarter.
- Cardtronics PLC CATM, +34.96% shares surged 32% after the company said it had received a buyout offer.
What are other markets doing?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 0.947% jumped 1.7 basis points to 0.935% on growing expectations for reflationary stimulus. Yields and bond prices move in opposite directions.
- The ICE U.S. Dollar Index, DXY, +0.13% a measure of the U.S. currency against a basket of six major rivals, was up 0.1% at 91.07.
- The pan-European Stoxx 600 Europe index SXXP, +0.32% rose 0.4%, while London’s FTSE 100 index UKX, +0.08% was up 0.3%.
- Oil futures reversed early gains to decline slightly, with the U.S. benchmark CL.1, -0.07% down 0.3% to $45.41 a barrel. Gold futures tumbled 1.2%, as stimulus bets nudged investors to riskier assets. The February contract GCG21, -1.48% was trading near $1,852.50 an ounce.
Read next: What will 2021 bring for ETFs?
