Figure: Five-day chart, S&P 500 index. Source: Yahoo Finance
Stan Choi and Alex Weig
Shares fell on Wall Street on Monday, returning some of their recent earnings as a new, potentially more contagious strain of coronavirus in the UK has raised concerns that the global economy could expect even more punishment.
The S&P 500 lost 0.4%, the second straight in a row after rising to an all-time high on Thursday. The temperature index cut losses during the day, but recovered after falling 2% earlier. Treasury bond yields have mostly declined, suggesting that investors are worried about the economy. Crude oil prices have fallen due to fears of disappearing demand.
The sales took place on a busy trading day when a lot of forces were pushing and pulling the market. According to analysts, weak trade ahead of the shortened holiday of the week could also worsen the movement.
News of a new and potentially more infectious strain of coronavirus is forcing countries around the world to limit travel from the United Kingdom. This has raised concerns among traders about the possible economic consequences if it spreads to other countries or proves to be resistant to the spread of vaccines.
“The market is focused on the restrictions in place in the UK, and more and more of the UK is closing, and whether that will happen in the US,” said Quincy Crosby, Prudential Financial’s chief market strategist.
The S&P 500 fell 14.49 points to 3,694.92. The Dow Jones industrial index rose 37.40 points, or 0.1%, to 30,216.45 after erasing a previous loss of 423 points. The Nasdaq index fell 13.12 points, or 0.1%, to 12,742.52. The Russell 2000 small-cap index increased 0.34 points, or less than 0.1%, to 1,970.33.
Encouraging news from Washington helped keep sales under control. Congress finally seemed to be acting as part of a $ 900 billion effort to help the economy. Leaders of the House of Representatives and Senate planned to vote Monday on the deal, which will include $ 600 in cash payments sent to most Americans, additional benefits for laid-off workers and other financial support.
Economists and investors have been seeking such help for months, and the recent boost in momentum for talks has led to rising stock prices pending a deal. Analysts say some traders may have sold to lock in profits, with a trade-off virtually guaranteed and prices close to the highest they have ever been. Even after falling on Monday, the S&P 500 has only returned to where it was earlier this month.
Beyond the Atlantic, the negotiators passed the Sunday deadline set for negotiations on trade terms for the UK’s exit from the European Union. Investors have been focused on the course of these talks because Brexit without an agreement could cause massive disruptions for businesses on New Year’s Day.
Monday is also the first day of trading for Tesla since joining the S&P 500 index. This year’s electric car maker has grown so much, nearly 731% as of Friday night, that some critics say its price doesn’t make sense. But its inclusion in the benchmark index led to trades of $ 90.3 billion, as the company instantly became the sixth largest in the S&P 500. On Monday, Tesla fell 6.5%.
The Prime Minister of the United Kingdom Boris Johnson said on Saturday that he was introducing London and the south-east of England to a new level of restrictions after scientific advisers warned that they had discovered a new variant of the coronavirus. There is no evidence that mutations in the new strain make it more deadly, but it seems to infect it more easily than others.
Two vaccines against COVID-19 have already been approved in the United States, and regulators around the world have also either approved or are considering the use of vaccines. The hope that widespread vaccination will return the economy to a normal state has been a major reason for rising prices in world markets.
So far vaccinations are only for healthcare professionals and other at-risk groups. It will be some time before the wider spread will be able to bring life around the world to normal, and the growth of coronaviruses and deaths meanwhile is adjusting the world economy to a few gloomy months.
Most of the alarms hit European stock markets, where France banned trucks from the UK for 48 hours. Other countries have also stopped flights from the UK.
The French CAC 40 fell 2.4% and the German DAX lost 2.8%. The FTSE 100 in London fell 1.7%.
All new restrictions on movement have reduced travel-related stocks on Wall Street. Cruise operator Carnival was down 1.9%, Norwegian Cruise Line was down 1.6% and American Airlines was down 2.5%.
Energy producers ’stocks were also weak due to fears that tightened travel restrictions could mean even fewer seats filled on planes and fewer miles of cars traveling.
Among the few earnings in the market was Nike, which grew 4.9% after reporting higher revenue and earnings for the last quarter than analysts had expected.
Financial stocks were another rare source of resilience after the Federal Reserve said Friday that the 33 largest banks look healthy enough to survive a sharp downturn. The Fed also allowed the share buyback with some restrictions.
Goldman Sachs rose 6.1% after saying it expects to start buying back its shares again next quarter. Goldman Sachs and Nike are two of the 30 stocks in the Dow, and their big strides above have helped the Dow hold up better than the broader stock market.
Yields on 10-year Treasury bonds remained stable at 0.93%.
AP Business Writer Elaine Courtenbach contributed.
Source: AP News
Share price data is provided by IEX Cloud with a 15-minute delay. Chart cost data is provided by TradingView with a 15-minute delay.
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