Market Snapshot: Dow pulls back from record high as Birx says COVID will be ‘worst event this country will face’

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Stocks were mostly lower Monday, as worries about COVID-19’s spread escalated and unease about global political developments appeared to undermine risk appetite on Wall Street.

How are stock benchmarks performing?
  • The Dow Jones Industrial Average DJIA, -0.34% fell 137 points, or 0.5%, to 30,081.
  • The S&P 500 SPX, -0.09% was down 3 points, or 0.1%, to 3,696.
  • The Nasdaq Composite COMP, +0.41% rose 65 points, or 0.5%, to 12,529, after setting an intraday record on Monday at 12,513.15.

On Friday, the stock market closed out the week higher and all three major benchmarks, as well as the small-cap Russell 2000 RUT, +0.21%, finished at all-time highs:

  • The Dow DJIA, -0.34% rose 1% for the week.
  • The S&P 500 index put in a 1.7% weekly advance.
  • Nasdaq Composite Index gained 2.1%
What’s driving the market?

Investors were finding few reasons to drive the Dow and S&P 500 to further records on Monday as they pondered the prospect of a fresh round of relief from Washington lawmakers. Additions spending is seen as arguably the biggest potential catalyst for markets as the economic recovery faces a challenge from the resurgence of the COVID-19 pandemic.

Some economists and strategists are urging Capitol Hill to pass a new coronavirus aid package as soon as possible to help Americans weather the pandemic until a vaccine is widely distributed because many view the pace of job growth slowing substantially.

“While a game changer in the long term, the vaccine deployment won’t be enough to address the stalling recovery over the next few months.” wrote Hussein Sayed, chief market strategist at FXTM, in a Monday note. “Hence, markets are counting on U.S. policy makers to act.”

Top congressional Democrats have endorsed a $908 billion bipartisan package that calls for $300 a week in enhanced unemployment benefits, $288 billion in assistance for U.S. businesses and $160 billion for state and local. Pelosi said Friday that talks on a COVID-19 relief package have “momentum.” 

Sen. Bill Cassidy, R-La., on Sunday said he was optimistic President Donald Trump and Senate Majority Leader Mitch McConnell, R-Ky., will back the proposal, the Associated Press reported.

The closely followed report on the state of U.S. employment in November released on Friday showed that 245,000 jobs were added to the U.S. economy, far less than the 432,000 estimated, marking the monthly recovery from the global epidemic since May and suggesting that it may take several years to recover the millions of jobs lost.

Meanwhile, investors were also paying attention to discussions between the European Union and U.K. officials that appear perilously close to leading to no trade agreement.

Over the weekend, U.K. Prime Minister Boris Johnson held talks with European Commission President Ursula von der Leyen, as negotiators try to reach a so-called Brexit deal, according to reports. The British pound was under pressure on Monday as investors fear that a no-trade deal will come to fruition, potentially adding to market turmoil amid the pandemic.

Elsewhere in the world, Reuters reported the Trump administration was preparing economic sanctions on a dozen more Chinese officials, in response to Beijing’s crackdown on dissent in Hong Kong.

On top of that, index compiler FTSE Russell said it would drop eight Chinese stocks from major indexes that it says supports China’s military.

In November, President Trump also signed an executive order barring Americans from investing in Chinese companies that are believed to support China’s military, intelligence and security services.

On the public-health front, Dr. Deborah Birx, the White House’s coronavirus response coordinator, warned on Sunday that the coronavirus surge “is the worst event that this country will face,” as hospital systems are overrun.

Thus far, the global tally for confirmed cases of the coronavirus that causes COVID-19 rose above 67 million on Monday, according to data aggregated by Johns Hopkins University, while the death toll rose above 1.5 million. The U.S. has the highest case tally in the world at 14.8 million and the highest death toll at 282,324, or more than a fifth of the global total.

The rise in infections was prompting new stay-at-home orders, set to take effect Sunday night in Southern California, much of the San Francisco Bay Area and other areas.

Which stocks are in focus?
How are other assets faring?

The pan-European Stoxx 600 index SXXP, -0.30% fell 0.4%, while the U.K.’s FTSE 100 index UKX, +0.08%  rose 0.4%.

In Asian markets, China’s Shanghai Composite Index SHCOMP, -0.81% finished 0.8% lower, while Hong Kong’s Hang Seng HSI, -1.23%  booked a 1.2% drop. Japan’s Nikkei 225 NIK, -0.76%  ended 0.8% lower.

The yield on the 10-year Treasury note  TMUBMUSD10Y, 0.940% fell 3.8 basis points to 0.931%. Yields and prices move in opposite directions.

The ICE U.S. Dollar Index DXY, +0.07%,  a gauge of the greenback’s strength against its major rivals, was 0.1% higher.

Crude-oil futures CL.1, -0.24%  fell 0.4% to $46.09 a barrel on the New York Mercantile Exchange Gold futures GCG21, +1.55%  rose 1.6% to $1,869.40 an ounce.