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Dow Plunges 345 as Shutdown Worries Overshadow Vaccine Hopes

Dow Plunges 345 as Shutdown Worries Overshadow Vaccine Hopes
(Joe Sohm/Dreamstime)

Wednesday, 18 November 2020 04:12 PM

U.S. stocks closed steeply lower after a late-session sell-off on Wednesday as investors weighed surging COVID-19 infections and mounting shutdowns against encouraging vaccine developments.

While the three major U.S. stock indexes oscillated through much of the day, with economically-sensitive cyclicals and small caps leading the way, they closed sharply in the red.

"It's a confused market because portfolio managers don't know which time period to focus on," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. "It's this trade-off between the near term over the six to nine months of continued spread of the virus and the period after that when everyone's vaccinated and the virus is eradicated."

"There's a lot of issues out there but the decided bias has been toward value and cyclicals," Ghriskey added.

Pfizer Inc and its German partner BioNTech revealed a 95% success rate at the conclusion of their COVID-19 vaccine trial, just days after Moderna Inc announced a similar rate of success in preliminary data from its vaccine candidate.

Market participants have been greeting vaccine developments with guarded optimism, but that is being tested as global new infections soar to record levels, and roll-backs of reopenings and new lockdowns continue to mount.

The Dow Jones Industrial Average fell 344.93 points, or 1.16%, to 29,438.42, the S&P 500 lost 41.74 points, or 1.16%, to 3,567.79 and the Nasdaq Composite dropped 97.74 points, or 0.82%, to 11,801.60.

All 11 major sectors in the S&P 500 closed in negative territory, with energy shares suffering the biggest loss.

Third-quarter reporting season has reached the final inning, with 468 of the companies in the S&P 500 having reported. Of those, 84.4% have surprised consensus to the upside, according to Refinitiv.

Boeing Co initially provided the biggest lift to the Dow after the Federal Aviation Commission green-lighted the planemaker's grounded 737 MAX aircraft to resume flights, but its shares later reversed course, shedding 3.2%.

Target Corp handily beat quarterly profit and sales estimates, boosted by a 155% jump in comparable digital sales. The retailer's stock rose 2.3%.

Lowe's Companies Inc dropped 8.2% after the home improvement retailer forecast lower-than-expected holiday quarter earnings as it beefs up its online business and doles out employee bonuses to ease pandemic-related hardship.

Declining issues outnumbered advancing ones on the NYSE by a 1.52-to-1 ratio; on Nasdaq, a 1.57-to-1 ratio favored decliners.

The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 142 new highs and nine new lows.

Volume on U.S. exchanges was 11.42 billion shares, compared with the 10.44 billion average over the last 20 trading days.

GLOBAL MARKETS

A gauge of global shares climbed to a record for a third straight day and the dollar continued to slump on Wednesday as further upbeat COVID-19 vaccine news helped alleviate concerns about rising infection rates and related economic damage.

After a sluggish start, European shares closed higher as vaccine optimism and a round of takeover deals helped offset concerns over fresh lockdown measures to slow the spread of the virus in the region.

The pan-European STOXX 600 index rose 0.44% and MSCI's gauge of stocks across the globe shed 0.52%, touching an intraday record for a third consecutive day before turning lower late in the session as the U.S. equity market suffered a swoon heading into the close.

While the U.S. dollar moved off its earlier lows following better-than-expected U.S. housing data, the greenback was still on pace for its fifth straight decline as the Pfizer news gave investors an appetite for some risk taking.

The dollar index fell 0.043%, with the euro down 0.05% to $1.1855.

The weaker dollar also helped lift the pound, along with hopes Britain will be able to secure a post-Brexit trade deal with the European Union before its departure from the EU's customs union and single market in January. Sterling was last trading at $1.327, up 0.22% on the day.

U.S. Treasury yields reversed early declines on optimism over a potential vaccine and after a weak 20-year bond auction diminished the appeal of the safe-haven debt. Benchmark 10-year notes last fell 1/32 in price to yield 0.875%, from 0.872% late on Tuesday.

The increased risk appetite on the vaccine news also helped oil prices advance, along with hopes OPEC and its allies will delay a planned increase in oil output.

U.S. crude settled up 0.94% at $41.82 per barrel and Brent was at $44.34, up 1.35% on the day.

Safe haven gold, meanwhile, dropped 0.5% to $1,870.19 an ounce.

© 2021 Thomson/Reuters. All rights reserved.


   
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U.S. stocks closed steeply lower after a late-session sell-off on Wednesday as investors weighed surging COVID-19 infections and mounting shutdowns against encouraging vaccine developments.
wall street, stock market, dow, shutdown, vaccine, pandemic, covid
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2020-12-18
Wednesday, 18 November 2020 04:12 PM
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