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Investing.com – The Dow retreated Friday, as stimulus negotiations reportedly hit a snag as lawmakers appear dividend on the Federal Reserve’s use of emergency lending powers.
The Dow Jones Industrial Average fell 0.51%, or 153 points. The S&P 500 was down 0.50%, while the Nasdaq Composite slipped 0.13%. All three indexes remain on track for a weekly win.
Republicans reportedly want to curb the Federal Reserve’s use of emergency lending powers, while Democrats want to grant the central bank more leeway to carry out the measures, casting doubt on hopes a deal would be sealed by the end of the day.
Republicans believe the Fed’s use of emergency lending programs has pushed the central bank to operate beyond its monetary policy purview.
President Donald Trump supports the Republican efforts to rein in the Fed’s power.
“We are strongly in support of Senator (Pat) Toomey’s view with respect to the Treasury emergency funds,” National Economic Council Director Larry Kudlow told reporters, according to Reuters.
Still, there was reason for optimism on a deal after the House Democratic Caucus chair Hakeem Jeffries reportedly said that an agreement was close and could be sealed by tomorrow.
The day of red on Wall Street was led by value stocks – those tied to the progress of the economy – with consumer discretionary stocks among the biggest decliners.
Energy stocks were not far behind, falling nearly 1% as the threat to demand of fresh restrictions to curb rising Covid-19 cases weighed on sentiment.
In the US, coronavirus cases topped 17 million, with more than 3,600 deaths recorded on Thursday. But help in the battle against the pandemic appears to be on the way as the Food and Drug Administration is expected to approve Moderna (NASDAQ:MRNA)’s coronavirus vaccine emergency use authorization.
Industrials, meanwhile, were held back by a 5% plunge in FedEx Corporation (NYSE:FDX) after the shipping giant’s lack of guidance and weaker than expected margins in its ground business offset better-than-expected second-quarter results.
In other news, Tesla (NASDAQ:TSLA) hit a record high of $684.73 before paring some gains to trade about 3% higher as the electric car maker is set to join the S&P 500 index after the markets close.
“We believe the sustained profitability trajectory as evidenced in the September quarter was the final straw that got Musk & Co. into the S&P 500 this time around despite all the noise around tax credit boosts on the Street,” Wedbush said in a note.
