Dow closes more than 200 points lower to end down week amid concern over rising Covid cases
Stocks fell on Friday as rising new coronavirus cases, coupled with questions around central-bank funding for key emergency programs, cast doubt on a swift economic recovery.
The Dow Jones Industrial Average dropped 219.75 points, or 0.8%, to close at 29,263.48. The S&P 500 dipped 0.7% to 3,557.54. The Nasdaq Composite pulled back by 0.4% to end the day at 11,854.97.
Boeing and Salesforce were the worst-performing stocks in the Dow, falling 2.9% and 2.5%, respectively. Technology and industrials dropped 1.1% and 0.9%, respectively, to lead the S&P 500 lower.
Friday’s losses led the Dow and S&P 500 to their first weekly declines in three weeks. The Dow fell 0.7% this week and the S&P 500 lost 0.8% in that time period.
The U.S. seven-day average of daily new Covid-19 infections now stands at 165,029, according to a CNBC analysis of Johns Hopkins data, 24% higher than a week ago. On Thursday alone, a record 187,833 cases were reported. Many states have rolled back reopening plans and implemented fresh restrictions to curb the spread.
JPMorgan economists wrote in a note that coronavirus-related restrictions will “likely deliver negative growth” in the first quarter of 2021. They also downgraded their first-quarter GDP outlook to a contraction of 1%, making them the first Wall Street economists to forecast negative GDP for the start of next year.
Also weighing on sentiment Friday was a disagreement between the Treasury Department and the Federal Reserve over the continuation of funding for some of the emergency programs implemented during the recession.
On the bullish side, investors got more good news on the vaccine front. Pfizer and BioNTech said they applied for an emergency use authorization for their vaccine from the Food and Drug Administration. The companies said they can be ready to ship the vaccine within hours after the FDA approves the authorization.
Stocks may continue to struggle Thanksgiving week amid Covid-19 outbreaks
Stocks could continue to struggle with the twin themes of the spreading virus and a potentially robust recovery, once a vaccine is deployed next year.
In the coming week, the restrictions the spreading virus is imposing on the economy will be clear, when many Americans choose to stay at home over the Thanksgiving Day holiday and partake in much smaller celebrations.
Lee said the market will continue to feel the push pull of the drag from the pandemic against the promise of recovery, seen in the rebound of cyclical stocks. Cyclical sectors industrials and materials were both up about 1% for the week, and financials were up a half percent. But tech and communications, both big tech and growth sectors that benefited from the stay-at-home trade, were lower.
Stocks eyes on Fed and key economics
The Treasury Thursday indicated it would not continue five of the Fed’s emergency program from when they expire at year end, surprising some in the markets. The Fed objected, but the markets took the development in stride, as traders expect the programs to be reinstated if financial conditions warrant it.
The Fed releases the minutes of its last meeting Wednesday afternoon, and that could be important as traders are watching to see if the central bank reveals any detail of discussions on potential changes to its asset buying program. There is widespread speculation the Fed could tweak its $80 billion Treasury buying program at the December meeting to include more longer duration notes and bonds, a move that should hold down already low long-term rates.
Also in the week ahead, there is some key data including personal income and spending and durable goods on Wednesday. Consumer confidence is Tuesday and consumer sentiment is released Wednesday. There are also a few Fed speakers, who will be watched closely for any comments on the expiring programs.
Reference: CNBC
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