Dow falls Tuesday by most this month, but Nasdaq ends at new record amid angst over coronavirus surge

The Dow Jones Industrial Average saw its biggest loss this month on Tuesday and the benchmark S&P 500 stock index closed lower for a third day, but the Nasdaq Composite ended at a new record, helped by a jump in Apple’s stock as investors warmed to its venture into self-driving vehicles.

Investors remain concerned about an ongoing surge in coronavirus cases in many American states and in Europe, even though a vaccine rollout is underway and Congress passed another financial aid bill to help consumers and businesses.

How are equity benchmarks performing?
  • The Dow Jones Industrial Average DJIA, +0.23% fell 200.94 points, or 0.7%, to finish at 30,015.51, registering its largest one day point and percentage decline since Monday, November 30, 2020.
  • The S&P 500 index SPX, +0.35% was down 7.66 points to reach 3,687.26, a decline of 0.2%, for a third day of lower closes.
  • The Nasdaq Composite Index COMP, +0.26% rose 65.4 points to end at 12,807.92, leaving it up 0.4%, at a new record.

On Monday, markets finished mostly lower but not before a major comeback:

  • The Dow closed 37.40 point, or 0.1%, higher at 30,216.45, after touching an intraday low of 29,755.53.
  • The S&P 500 index slid 14.49 points, or 0.4%, to end at 3,694.92.
  • The Nasdaq Composite Index closed 13.12 points, or 0.1%, lower at 12,742.52.
What’s driving the market?

U.S. stocks came under pressure throughout Tuesday’s session as uncertainty about a new strain of coronavirus in the U.K. and other parts of the world shifted investors’ focus onto equity valuations and the economic outlook for 2021.

Limiting losses, though, was the passage of a coronavirus aid package by Congress, though there were questions about how much of the deal was already into the market’s recent rally.

“U.S. stocks are entering holiday mode as concerns over a virus variant temper a humble rebound that stemmed from the approval of a fiscal relief bill,” said Edward Moya, senior market analyst at Oanda, in a note.

President Trump is expected to sign another coronavirus aid package into law after the Senate and House voted late Monday to approve the $900 billion plan and a $1.4 trillion spending bill that will fund the government through September 2021. The Senate passed the fiscal spending bill 92-6 while the House approved it in a 359-53 vote late Monday.

Angst over a variant of the coronavirus that causes COVID-19 started over the weekend. Some medical experts, however, have said that vaccines should remain effective against the disease. President-elect Joe Biden received a vaccine during an on-camera event on Monday.

In the U.S. there were 201,723 new COVID-19 cases reported in the U.S. on Monday, up from 179,801 on Sunday, according to data provided by the New York Times.

See: U.S. tops 18 million COVID-19 cases, as daily new cases and deaths are back on the rise

“On the eve of 2021, the economy carries very little momentum as a catastrophic third Covid wave is limiting mobility, curbing employment and constraining demand,” wrote Gregory Daco, chief U.S. economist at Oxford Economics in a Tuesday research note.

“The $900bn fiscal aid package is months late and will likely fall short of what is needed to prevent a rough winter, but it’s better than nothing,” the economist wrote.  

In economic news, a final reading of U.S. gross domestic product in third quarter came in at a slightly stronger rate than had been estimated by economists surveyed by MarketWatch, at an annualized growth rate of 33.4% compared with a previous reading of 33.1%, as the economy claws back from pandemic lows.

“The third read on GDP this morning isn’t too surprising, but it is encouraging,” wrote Mike Loewengart, managing director and investment strategist at E-Trade Financial, in a Tuesday note.

“While these numbers aren’t reflective of the here and now, they show the resiliency of the economy. But we know things have changed pretty drastically in Q4, so all eyes will be on where GDP shakes out in the new year,” the strategist said.

After two quarters of distorted GDP data though, the economy is seen returning to a somewhat more normal growth rate in the fourth quarter of 2020. Economists are expecting growth at a 3.5% annualized rate in the fourth quarter.

But other data painted a less-than-stellar outlook for the economy, with U.S. existing home sales dropping 2.5% to 6.69 million rate in November and a reading of consumer confidence falling to 88.6 in December from revised 92.9 in prior month.

Which stocks are in focus?
  • Apple Inc. AAPL, +0.77% shares rose 2.9% after a report that the tech giant is targeting 2024 as the year it produces a passenger vehicle.
  • Shares of Sportsman’s Warehouse Holdings Inc. SPWH, +0.14% surged nearly 40% after news on Monday that it is being acquired by privately held Great American Outdoors Group, which already owns Bass Pro Shops, Cabela’s, White River Marine Group and nature-based resorts.
  • Shares of Peloton Interactive Inc. PTON, -0.02%  were up over 11% after it announced Monday afternoon that it is acquiring another manufacturer of exercise equipment, Precor, at a valuation of $420 million.
  • Tesla shares TSLA, +2.44% fell 1.5% during the electric-vehicle maker’s second session as an S&P 500 index constituent.
  • Shares of Google parent Alphabet Inc. and Facebook were in focus after the pair agreed to team to fight antitrust lawsuits. Shares of Facebook FB, -0.26% were off 2.1% while Alphabet shares GOOG, +0.37% GOOGL, +0.34% were down 0.9%.
How are other assets performing?