Tags: wall street | stock markets | vaccine | covid | economy | dow

S&P 500 Closes Lower Despite Vaccine Rollout, Mega M&A Activity

S&P 500 Closes Lower Despite Vaccine Rollout, Mega M&A Activity

Monday, 14 December 2020 04:06 PM

The S&P 500 ended lower on Monday, weighed down by Walt Disney, while Alexion Pharmaceuticals jumped on a $39 billion buyout offer from AstraZeneca in one of the year's biggest deals.

The Dow Jones Industrial Average hit a record high before ending lower, pulled down by Walt Disney.

U.S. officials began to administer the vaccine developed by Pfizer and its German partner BioNTech on Monday following emergency-use approval from federal regulators last week.

Shares of Disney, down 3.65%, and Pfizer, down almost 5%, weighed more than any other stocks on the S&P 500.

The index's four-day losing streak was its longest since Sept. 21.

The S&P 500 consumer discretionary index was the strongest gainer among sector indexes, up 1% and lifted by a rise in Amazon, up 1.4%. The energy index tumbled over 3%.

The S&P 500 gave up earlier gains of almost 1%. The index has surged about 13% to record highs in 2020, despite the pandemic, which has wrought economic devastation and killed more than a million people.

"While the entire market is pleased, is optimistic, is bullish about the arrival of the vaccine this morning into the U.S., I think the average investor is realizing that this roll-out, this distribution of the vaccine is not going to be a silver bullet, is not going to go as fast as one hopes," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Alexion Pharmaceuticals Inc was among the top boosts to the S&P 500 and the Nasdaq, surging about 30% to a 4-1/2 year high after British drugmaker AstraZeneca said it would buy the U.S. biotech firm. AstraZeneca's U.S.-listed shares dropped 8%.

Walt Disney fell after BMO Capital Markets downgraded the stock following its recent gains and said Netflix was again its "top pick." Netflix climbed almost 4%.

The Dow Jones Industrial Average, after a sharp climb in early trading, fell 184.82 points, or 0.62 percent, to close at 29,861.55. The S&P 500 lost 15.97 points, or 0.44 percent, to 3,647.49 and the Nasdaq Composite added 62.17 points, or 0.5 percent, to 12,440.04.

Also on Monday, negotiators in the U.S. Congress neared agreement on a massive government spending deal that would avert a government shutdown, as Republicans and Democrats insisted they want to pass a fresh round of aid to a coronavirus-hit nation.

Investors continued to focus on early voting in a pair of U.S. Senate races in Georgia that will determine control of the chamber and heavily influence lawmaking.

E-commerce company Alibaba Group Holding Ltd dipped after China warned its internet majors of more anti-trust scrutiny, imposed fines and announced probes into deals involving Alibaba and Tencent Holdings Ltd.

Electric-car maker Tesla Inc rallied almost 5% as anticipation of its addition to the S&P 500 benchmark next week offset a report of production delays.

Volume on U.S. exchanges was 10.4 billion shares, compared with the 11.5 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.08-to-1 ratio favored advancers.

The S&P 500 posted 25 new 52-week highs and no new lows; the Nasdaq Composite recorded 211 new highs and 15 new lows.

GLOBAL MARKETS

Global stock markets were mixed on Monday as the start of the COVID-19 vaccine roll-out in the United States offered some respite to investors, but spikes in infection and death rates tempered optimism.

Currency markets were dominated by news that London and Brussels had agreed to "go the extra mile" to try to salvage a Brexit trade agreement, lifting the British pound and euro against the struggling dollar.

Progress on coronavirus vaccines boosted sentiment, with the first doses shipped across the United States as part of an effort to inoculate more than 100 million people by the end of March.

However, some traders noted that optimism about the vaccine had already been factored in, limiting upside for investors.

"We've been trading off the same vaccine headlines for three or four months and eventually you've got to think that most of that is priced in," said Dennis Dick, a trader at Bright Trading LLC. "This market is 100% relying on this vaccine."

Second waves of the pandemic forced Germany, the Netherlands and London back into stricter lockdowns. Cases surged in Japan, South Korea and parts of the United States as well.

"The vaccine has and will likely continue to provide a tailwind to the market that is allowing investors to look beyond record case levels, hospitalizations and deaths," analysts at JPMorgan said in a note.

The euro was last up 0.31 percent, at $1.2148, while Europe's broad FTSEurofirst 300 index added 0.30 percent, at 1,513.23.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 2.47 points, or 0.38%, to 642.04.

In currencies, Sterling was the day's big mover, gaining on both the euro and the dollar as what last week had appeared to be evaporating prospects of a Brexit agreement came back to life.

The pound was last trading at $1.3321, up 0.73% on the day after earlier climbing 1.2% to $1.3423. The euro was last up 0.30 percent, at $1.2147.

"Even in the face of amped up rhetoric, we continue to think a deal is the most plausible outcome," said Gilles Moec, AXA Group chief economist.

The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.27 points or 0.3 percent, to 90.706.

The yen was last down 0.02 percent, at $103.9900.

The Federal Reserve's policy meeting on Tuesday and Wednesday will be an added hurdle for the dollar. The market is assuming the central bank will merely refine its forward guidance on policy rather than buying more bonds or "twisting" its portfolio to add longer-dated debt.

The Bank of England on Thursday and the Bank of Japan on Friday will close out central bank meetings for 2020. Before that, Wednesday brings the global flash PMIs and on Tuesday, China will issue its monthly data.

"The risk is then if the Fed does unveil a surprise twist at this meeting, then Treasuries could rally and the USD could fall," said Tapas Strickland, a director of economics at NAB.

An extra wrinkle is the chance of a U.S. deal on fiscal stimulus after a top Democrat hinted a compromise was possible to get an agreement past Republican objections.

Negotiators in the U.S. Congress were nearing agreement on a massive government spending deal that would avoid a government shutdown and could serve as the vehicle to pass a fresh round of aid to a coronavirus-hit nation.

Gold prices slid on Monday as the rollout of a COVID-19 vaccine in the United States drove optimism in wider financial markets, with investors banking on a resultant economic recovery.

Spot gold prices fell $-10.2991 or -0.56 percent, to $1,828.73 an ounce. U.S. gold futures settled down 0.6% at $1,832.10

Oil prices eased on Monday as persistent oversupply in the market overshadowed hopes that a rollout of coronavirus vaccines will lift global fuel demand.

Brent crude for February delivery settled up $0.32, or up 0.64 percent, at $50.29 a barrel. U.S. crude settled up $0.42, or up 0.9 percent, at $46.99 per barrel.

© 2021 Thomson/Reuters. All rights reserved.


StreetTalk
The S&P 500 ended lower on Monday after the launch of a COVID-19 vaccine campaign in the United States, while Alexion Pharmaceuticals jumped on a $39 billion buyout offer from AstraZeneca in one of the year's biggest deals.
wall street, stock markets, vaccine, covid, economy, dow
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2020-06-14
Monday, 14 December 2020 04:06 PM
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