U.S. stock indexes slipped on Monday, stepping back from their record highs set on Friday. The surge in Covid-19 cases, hospitalizations, and fatalities continues, and more governments are responding with restrictions on gatherings and economic activity. Most of California is under a stay-at-home order and New York Gov. Andrew Cuomo said indoor dining could be further restricted if the hospitalization rate fails to stabilize.
Trade tensions are in the news as well on Monday, as the U.S. reportedly readies fresh sanctions on China, and the European Union failed to strike a trade deal with the U.K. over the weekend. Progress on fiscal stimulus in the U.S. remained a possibility.
The Dow Jones Industrial Average closed down 148 points, or 0.5%, on Monday. The S&P 500 lost 0.2% and the Nasdaq Composite ticked up 0.5%. The small-cap Russell 2000 index finished the day about flat.
The price of crude oil fell 1.1%, to $45.76 a barrel, while natural gas futures lost 6.6%, to $2.41 per million British thermal units. Energy stocks were hit particularly hard Monday, with the Energy Select Sector SPDR Fund (XLE) closing down 2.4%. Forecasts predict a warm winter, and last weekâ€™s OPEC meeting wasnâ€™t as bullish for oil prices as some commodity strategists had predicted.
The U.S. reported nearly 177,000 new Covid-19 cases on Sunday, according to the Covid Tracking Project. That compares with an increase of 148,000 a week earlier. Hospitalizations remained about 100,000 nationwide, at a record high. Restrictions went into effect in California on Sunday night, and several other states and local governments have imposed some limits on gatherings and businesses in an effort to slow the spread of the virus.
Investors have been eyeing the likelihood of fiscal stimulus happening soon and Sen. Mark Warner told CNN that a deal could happen this week. The latest bipartisan bill is currently $908 billion, a compromise figure between Democratsâ€™ and Republicansâ€™ earlier separate proposals. The continued surge in coronavirus cases could motivate Congress to act on stimulus, after months of wrangling. That could tide the slowing economic recovery over until widespread vaccine distribution allows it to stand on its own.
Reuters reported the U.S. was preparing economic sanctions on a dozen more Chinese officials, in response to Beijingâ€™s crackdown on dissent in Hong Kong. Chinaâ€™s foreign ministry said it opposed any U.S. interference in its domestic affairs. Separately, China reported a 21% jump in exports in November.
Over the weekend, U.K. Prime Minister Boris Johnson held talks with European Commission President Ursula von der Leyen, as negotiators try to reach a deal on a level playing field, dispute mechanisms, and fishing. Irish Foreign Minister Simon Coveney told Irish broadcaster RTE that the update on Monday from the EUâ€™s chief negotiator, Michel Barnier, was â€œvery downbeat.â€
The pound dropped sharply, which gave a boost to the U.K. FTSE 100 stock market index, as many top U.K.-listed companies rely on revenue outside Great Britain. The FTSE 100 was up less than 0.1% by the close in London.
â€œAs time begins to run out, the base case scenario for the majority of investors is still that an agreement will be reached before time runs out. However, the clock is ticking and every day that passes without an agreement being reached increases the pressure and raises the stakes, forcing investors to start factoring in the possibility of there being no deal in place by December 31, at the end of the transition period,â€ said Ricardo Evangelista, senior analyst at ActivTrades.
Here were some notable stock moves Monday morning:
Lyft (LYFT) shares gained 1% after Piper Sandler upgraded the stock to Overweight from Neutral and lifted its price target to $61 from $39.
Teladoc Health (TDOC) fell 3.1% after Stephens downgraded the stock to Equal Weight from Overweight and reduced its price target to $210 from $270.
Occidental Petroleum (OXY) shares dropped 2.2% after MKM Partners downgraded the stock to Neutral from Buy.