US stocks drop as stimulus considered underwhelming

Published On: December 23, 2020Categories: Stocks & Shares1.6 min read

The Dow Jones Industrial Average dropped 0.43 per cent, the S&P 500 declined 0.03 per cent and the Nasdaq Composite advanced 0.47 per cent

Lingering concerns over a new variant of COVID-19 in the UK weighed on a gauge of global equities and sent the euro, pound and Treasury yields lower.

The US S&P 500 stock index hovered near flat in choppy trade on Tuesday, despite the US Congress’s passage of an $US892 billion coronavirus aid package.

Some investors said that the fiscal stimulus had already been priced into US equities, while other observers considered the package underwhelming.

There were probably hopes that there would be something bigger, said Michael Purves, chief executive of Tallbacken Capital Advisors. There’s a good chance the economy will need another package.

Weak US economic data, including existing home sales and an index of consumer confidence, also stymied stocks while lending a boost to the dollar.

On Wall Street, the Dow Jones Industrial Average fell 130.78 points, or 0.43 per cent, to 30,085.67, the S&P 500 lost 0.94 points, or 0.03 per cent, to 3693.98 and the Nasdaq Composite added 60.41 points, or 0.47 per cent, to 12,802.92.

US Treasury yields also fell as investors weighed the likelihood of increased lockdowns in response to the new COVID-19 variant. Benchmark 10-year Treasury notes last rose 7/32 in price to yield 0.9197 per cent, from 0.941 per cent late on Monday.

MUFG said in a note to clients it expected London and Brussels would strike a last-minute deal, but added: Even if a trade deal is reached, upside potential for the pound will now be dampened by recent negative COVID developments in the UK.

In Europe, the sluggishness in US stocks offset a rebound in stocks, which had been pummelled on Monday as fresh coronavirus concerns mounted. Progress toward a trade deal between the European Union and the UK helped lift the pan-European STOXX index, which ended 1.18 per cent higher.

The STOXX logged its biggest one-day percentage gain in more than five weeks.

As a result of the performance in US stocks, MSCI’s index of global stocks slipped. It was last down 0.06 per cent.

About the Author: Jonathan Adams

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