Stocks Turn Lower as Investors Eye Stimulus Talks
Major indexes pull back from record levels
By Updated Dec. 9, 2020 1:15 pm ET
Listen to this article
4 minutes
This feature is powered by text-to-speech technology. Want to see it on more articles?
Give your feedback below or email
audiofeedback@wsj.com.
U.S. stocks dropped Wednesday afternoon as investors watched the Congressional back-and-forth on fresh fiscal stimulus spending.
The Dow Jones Industrial Average fell 85 points, or 0.3%. The S&P 500 slipped 0.5% a day after the benchmark notched its 30th record close for this year. The technology-heavy Nasdaq Composite lost 1.1%.
All three indexes have traded at record levels in recent sessions as investors bet on an economic recovery in 2021. Some said a pause in the rally wasn’t a surprise.
Investors are optimistic Congress will pass another coronavirus relief package to bolster the economic recovery as rising infections prompt restrictions on social and business activity. The size of the package, though, is a critical point. The Trump administration proposed a $916 billion package on Tuesday after Democrats rejected an effort by Senate Majority Leader Mitch McConnell to narrow the scope of the bill.
The Trump administration proposed a $916 billion package after Democrats rejected an effort by Senate Majority Leader Mitch McConnell, above.
Photo: Pool/Getty Images
A group of lawmakers was working on a compromise Wednesday that addressed issues including distribution of aid to state and local governments and legal protections for companies operating during the pandemic.
Congressional action is a key part of the larger bid to support the economy, said Stifel strategist Barry Bannister.
Ultimately, what the Fed and Congress want and the market needs is a self-sustaining recovery, he said. But that could take longer than expected. “The sky’s not falling, but there are definitely some dark clouds,” he said.
Lawmakers appear to be facing pressure to offer aid to those who have been hardest hit by the pandemic as infection levels and hospitalizations rise across the country. The U.S. reported more than 215,000 new cases for Tuesday. Some states have introduced fresh restrictions, triggering concern that the economic recovery could falter in the winter months.
“That deterioration in the medical situation is putting more pressure to get something done,” Hugh Gimber, a strategist at J.P. Morgan Asset Management. “The market is more hopeful, with the election out of the way, that compromise will be easier to find.”
In corporate news, shares of FireEye fell 12% after the cybersecurity firm said it was breached by nation-state hackers. The attack compromised the software tools used to test the defenses of thousands of customers.
Lowe’s rose 5.5% after the home-improvement retailer said it expects sales to rise about 22% for the fiscal year.
Tesla shares slipped 3.7%, a day after the company announced plans to sell up to $5 billion in stock and founder Elon Musk said he had moved to Texas from California for what he feels is a more supportive environment for entrepreneurs.
Meanwhile, shares of DoorDash were up 81% at $183 as they made their debut. The stock priced at $102 in the company’s initial public offering, above the estimated range of $90 to $95.
In bond markets, the yield on the 10-year U.S. Treasury note ticked up to 0.949%, from 0.913% on Tuesday. Yields rise when bond prices fall.
Overseas, the pan-continental Stoxx Europe 600 rose 0.3%. The British pound lost its early gains, and was down less than 0.1% against the dollar.
Issues Remain as Congress Looks to Pass End-of-Year Covid Relief Bill
0:00 / 3:42
Issues Remain as Congress Looks to Pass End-of-Year Covid Relief Bill
Issues Remain as Congress Looks to Pass End-of-Year Covid Relief Bill
Lawmakers working to pass a coronavirus aid bill face two sticking points: aid for state and local governments, and liability protections. WSJ’s Gerald F. Seib explains why these issues matter and what a compromise might look like. Photo: Drew Angerer/Getty Images
Investors are cautiously optimistic that the U.K. and European Union may strike a trade deal soon. British Prime Minister Boris Johnson is scheduled to talk face-to-face with European Commission President Ursula von der Leyen over dinner in Brussels.
“There is still optimism about the trade deal,” said Jane Foley, head of foreign-exchange strategy at Rabobank. “The market is assuming, given he’s traveling to Brussels, he is willing to push for a last-minute deal.”
Trading in Asia was mixed. China’s Shanghai Composite Index fell 1.1%, while South Korea’s Kospi advanced 2% and Japan’s Nikkei 225 rose 1.3%.
—Paul Vigna contributed to this article.
Write to Caitlin Ostroff at