Dow skids lower Friday amid setbacks on U.S. fiscal relief package and Brexit

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U.S. stock indexes traded modestly lower Friday morning, in a week that has been focused on uncertain progress toward another coronavirus relief package by Congress and thus far unsuccessful negotiations on Britain’s trade relationship with the European Union.

Hand-wringing about overly bullish sentiment and lofty valuations, despite progress on a coronavirus vaccine rollout, has also unsettled investors after the stock indexes hit new highs earlier in the week.

The Dow Jones Industrial Average was trading 86 points, or 0.3%, lower at 29,907; those for the S&P 500 index retreated 15 points to reach 3,653, a drop of 0.4%; the Nasdaq Composite Index lost 52 points, or 0.4%, to reach 12,349.

On Thursday, markets ended mixed with the Nasdaq Composite finishing higher:

For the week, the Dow is on track for a weekly decline of 1.1%, the S&P 500 index is headed for a 1.3% fall, while Nasdaq Composite was set for a 1.1% skid.

Wall Street is contending with a series of potentially disappointing outcomes that are disrupting the bullish mood on Wall Street.

A bipartisan $908 billion pandemic relief package in Washington remained in limbo with status uncertain, even as weekly economic data on Thursday showed a sharp rise in jobless benefit claims, likely due to an uncontrolled second wave of the COVID-19 pandemic in the U.S.

In the fiscal relief talks, Senate Republican leaders are pushing for a narrower coronavirus relief bill, with differences centering on state and local government aid, and liability protection for businesses. Meanwhile the House has recessed until next Tuesday after passing a one-week budget extension, but the Senate needs to also pass it Friday to avoid a government shutdown starting Saturday.

On top of that, U.K. Prime Minister Boris Johnson said the country needs to brace for the likelihood that a post-Brexit trade deal with the European Union won’t happen. European Commission President Ursula von der Leyen cautioned Friday that “positions remain apart on fundamental issues.”

“This might just be talk, as a way of trying to put pressure on the UK but nonetheless, traders have reacted by dropping stocks,” wrote David Madden, market analyst at CMC Markets UK, in a research note.

Video: Stock futures slide as coronavirus relief talks stall (Fox Business)

Stock futures slide as coronavirus relief talks stall
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A deal must be struck before the end of 2020 otherwise the U.K.’s current commercial and trading ties with the EU expire on Jan 1 without an agreement in place, an outcome that could roil global markets anew.

Meanwhile, the U.S. Food and Drug Administration said that it plans to complete and issue an emergency use authorization to BioNTech and Pfizer Inc.’s experimental COVID-19 vaccine, after an advisory panel recommended its approval on Thursday.

Still, cases and deaths from the deadly pathogen have been on the rise, with the U.S. averaging 211,127 cases a day, in the past week. There was a record of 107,258 COVID-19 patients in U.S. hospitals on Thursday, according to the COVID Tracking Project, topping the record of 106,705 set a day earlier.

Other countries have seen some vaccine setbacks though. Sanofi SA said Friday that the vaccine program it is developing with British pharmaceutical giant GlaxoSmithKline PLC has experienced a delay, and the Associated Press reported that Australia was abandoning a plan for a COVID-19 vaccine from biopharmaceutical company CSL  after false positive results to HIV tests.

Stocks in Europe failed to get any lift from Thursday’s news that the European Central Bank expanded and extended its asset-buying program as the eurozone deals with the COVID-19 pandemic.

In U.S. economic reports, the producer-price index climbed 0.1% last month, the government said Friday, matching the MarketWatch forecast. However, the rise in November reflected the smallest increase in seven months, underscoring the lack of inflationary pressure in an economy still struggling to emerge from the ravages of the coronavirus pandemic.

However, some market participants said that other measures of inflation, including the Commodity Research Bureau Index, or CRB, are pointing to higher prices.

“Bottom line, while the November PPI numbers look benign in the aggregate, the CRB commodity index was up 11% in the month alone so expect that to filter thru in the months to come and as seen in the pipeline stage of inflation,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Investors are also awaiting a reading on consumer sentiment at 10 a.m.

Pfizer Inc. said Friday’s its board has raised its quarterly cash dividend to 39 cents a share from 38 cents in the year-earlier period. The new dividend will be payable March 5 to shareholders of record as of Jan. 29. Shares were down 0.8% even amid the FDA news.

Airbnb Inc. shares were still in focus after the home rental company surged in its initial public offering. Shares gained 2.7% early Friday.

In Europe, the Stoxx Europe 600 index was trading 0.8% lower, while the U.K.’s FTSE 100 was off 0.6%.

The U.S. dollar index a gauge of the currency against a half-dozen rivals, was up 0.2% on Friday.

In commodities, U.S. oil was trading virtually unchanged, with West Texas Intermediate crude oil trading on the New York Mercantile Exchange off less than 0.1% at $46.76 a barrel. Gold prices were rising, with Comex trading gold for February delivery gaining 0.2% at $1,840.90 an ounce.

The 10-year Treasury note was yielding 0.89%, set for a weekly slide as bond prices rise and yields fall.

In Asian trade, Japan’s Nikkei 225 closed 0.4% lower on the day, while South Korea’s Kospi index closed up 0.9%. Hong Kong’s Hang Seng index closed 0.4% higher on Friday, while China’s Shanghai Composite Index finished the day off 0.8% and the CSI 300 closed down over 1%.

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