NEW YORK (REUTERS) – The S&P 500 closed lower on Monday (Dec 21), having clawed its way back from steep losses early in the session as investors juggled the outbreak of an ominous new strain of Covid-19 with the passage of a long-anticipated stimulus package.
The Nasdaq joined the S&P 500 in the red, but financials helped the blue-chip Dow reverse course for a modest gain.
“The ‘Santa rally’ will have to wait,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.”Troubling news about Covid in the UK has reminded markets that Covid isn’t solved yet; the road ahead may be bumpy and uncertain.”
Congress hammered out a pandemic relief agreement on Sunday after months of partisan wrangling. The US$900 billion (S$1.19 trillion) package, expected to pass on Monday, includes unemployment aid, small business relief, and vaccine distribution, but the dollar amount fell short of what many had hoped for.
“Fiscal stimulus plan appears big enough to hold off a recession, but not for long,” Carter added.
“But while it’s not as large as many market participants hoped, it does include many meaningful actions that can support markets.”
But the emergence of new, highly infectious strain of Covid-19 in Britain has raised fears of additional shutdowns, and prompted countries around the world to shut their doors to travelers from the United Kingdom.
The news sent airline stocks sliding, even with the prospect of US$15 billion in payroll assistance for commercial carriers included in the stimulus deal.
Tesla Inc became the most valuable company ever added to the S&P 500 and will account for about 1.69 per cent of the index. The electric car maker’s stock ended the session lower.
Banks bucked the trend. The US Federal Reserve released the results of its semiannual stress test late Friday and announced relaxed restrictions on buybacks and dividends.
Unofficially, the Dow Jones Industrial Average rose 36.94 points, or 0.12 per cent, to 30,215.99, the S&P 500 lost 14.47 points, or 0.39 per cent, to 3,694.94 and the Nasdaq Composite dropped 13.12 points, or 0.1 per cent, to 12,742.52.
Nike Inc rose after the athletic apparel maker boosted its full-year revenue forecast, prompting multiple brokers to raise their price targets.
Shares of Lockheed Martin Corp slid after announcing it would buy U.S. rocket engine maker Aerojet Rocketdyne Holdings Inc for US$4.4 billion.
International Business Machines Corp lost ground after saying it would acquire Finland-based startup Nordcloud, in its latest effort to bolster its cloud-computing business.