The Dow Jones Industrial Average fell Tuesday as concerns about elevated Covid-19 infection levels and a new strain of the virus in Europe overshadowed Congressâ€™ approval of a Covid-19 relief package.
The index of blue-chip stocks tumbled about 100 points, or 0.3%. The S&P 500 was essentially flat after swinging between small gains and losses throughout the day. The tech-heavy Nasdaq Composite, in contrast, edged higher, rising 0.4%.
Much of the stock market has lost steam this week as some nations began taking steps to curtail travel in an effort to contain the emergence of a fast-spreading variant of coronavirus from England. The U.K. imposed stringent restrictions on social and business activity, prompting concern that more countries may also be required to adopt measures that would hamper the global economic recovery.
â€œIt would be a brave man to suggest this will just remain a U.K.-specific issue,â€ said Derek Halpenny, head of research for global markets in the European region at MUFG Bank. â€œAre we going back into another phase of more pronounced global lockdowns again?â€
Oil prices slipped for a second day amid growing worries over the new restrictions imposed on travelers from the U.K. to other countries. Brent-crude futures, the benchmark in international energy markets, dropped 1.6% to $50.09 a barrel.
Meanwhile, the yield on the 10-year note ticked down to 0.923%, from 0.941% Monday, as some investors looked to the safety of U.S. government bonds. Yields fall when prices rise.
Investors are trying to gauge whether the new strain of Covid-19 will impact the efficacy of vaccines that are being rolled out this month.
BioNTech Chief Executive Ugur Sahin said Tuesday that the vaccine developed by his company, in partnership with Pfizer, would likely work against the new variant and is being tested. He also said it would be possible to make new inoculations against different strains within weeks.
â€œThe big unknown is to what degree could the new strain make the efficacy of the vaccine lower,â€ said Peter Garnry, head of equity strategy at Saxo Bank. â€œIf it just turns out to be more infections, and it doesnâ€™t have an effect on the vaccine, then the market will be less concerned.â€
Late Monday, a fresh $900 billion fiscal stimulus package was passed by Congress, ending weeks of anticipation from investors about whether lawmakers could end their stalemate. The bill, which includes direct checks to households and relief for small businesses, is expected to be signed by President Trump.
Even so, the billâ€™s passage wasnâ€™t enough to propel stocks higher.
â€œWeâ€™ve had the positive news on the vaccines and the fiscal deal, so thereâ€™s probably not a catalyst to drive stocks meaningfully higher in the next few weeks,â€ said Brian Levitt, global market strategist at Invesco.
When Is the Market on Holiday?
Select stock-market closures through yearâ€™s end
- Thurs. Dec. 24: U.S. stock market closes at 1 p.m. ET
- Fri. Dec. 25: Markets closed
- Mon. Dec. 28: London stock market closed
- Fri. Jan. 1: Markets closed
Still, Mr. Levitt noted that he maintains a positive outlook on equities.
â€œIn my opinion, betting against stocks over the next year and beyond is betting against medicine, science and policy makers, and Iâ€™m not willing to make those bets,â€ he said.
In corporate news, Apple rose 3.7% after Reuters reported that the iPhone maker intends to develop its own self-driving car technology.
Exercise-equipment maker Peloton Interactive gained 12%, on pace to log a new all-time high, after it agreed to buy commercial fitness-equipment provider Precor for $420 million in cash.
Travel stocks and shares of energy companies fell. Norwegian Cruise Line Holdings slid 5.8%. Oil producer Apache lost 2.7%.
Meanwhile, Tesla tumbled 3.8%, extending its losses for the week to roughly 10%. The electric-car maker made its S&P 500 debut Monday.
Moves in stocks could be big and markets may be especially choppy in coming days because fewer people are trading as the holiday period starts, said Salman Ahmed, global head of macro at Fidelity International.
â€œIt is a bad mix right now,â€ Mr. Ahmed said. â€œIn the short term, markets that have done really well in the last few weeks can come under pressure because of the liquidity situation.â€
The final stretch of trading in December is historically positive for the stock market, but this weekâ€™s losses may be a sign that investors are starting to take profits after a blockbuster year, said JJ Kinahan chief market strategist at TD Ameritrade. The S&P 500 is up 14% in 2020; the Nasdaq Composite has catapulted 43% higher.
Additionally, Mr. Kinahan noted, Tuesdayâ€™s worse-than-expected consumer confidence report may also be weighing on markets.
The Conference Board, a private research group, said its index of consumer confidence dropped to 88.6 in the first two weeks of December, from a revised 92.9 in November. Economists surveyed by The Wall Street Journal had expected a level of 97.5.
Still, there were small signs of optimism. Data from the Commerce Department showed Tuesday that U.S. gross domestic productâ€”the value of all goods and services produced across the economyâ€”increased at an annualized rate of 33.4% in the third quarter, slightly stronger than the previous estimate.
Overseas, European shares rebounded after Mondayâ€™s sharp losses. The pan-continental Stoxx Europe 600 gained 1.2%.
Major stock indexes in Asia closed lower. Chinaâ€™s Shanghai Composite fell 1.9%, and South Koreaâ€™s Kospi declined 1.6%.
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