Wall Street opens in the red as stimulus and COVID-19 concerns dampen sentiment

The main indices on Wall Street have started Friday’s session on the back foot as concerns over stimulus negotiations and rising cases of COVID-19 rattled market sentiment.

In the first minutes of trading, the Dow Jones Industrial Average was down 0.39% at 29,882, while the S&P 500 fell 0.46% at 3,651 and the Nasdaq dropped 0.56% to 12,336.

Amid the uncertainty of the political landscape, with a bleak outlook for Brexit negotiations also doing little to excite investors, traders seem content to take some profits following recent rallies.

Even pharma firm Pfizer Inc (NYSE:PFE) fell 1.6% to US$41.20 despite news that its COVID-19 vaccine developed with BioNTech is likely to be approved for emergency use by the US Food and Drug Administration.

7.45am: Wall Street to head lower amid doubts over stimulus

Doubts over the speed with which a financial stimulus programme could be introduced in the US are set to deter investors on Wall Street today.

The Dow Jones Industrial Average is expected to open 200 points in the hole at a shade below 29,800 while the broader-based S&P 500 is seen shedding 32 points at 3,636.

Even the Nasdaq Composite, which so often makes headway when the other two major indices retreat, is expected to shed 111 points at 12,295.

“We’re only just starting to see the impact of Thanksgiving in the US, where record cases and fatalities is an enormous problem going into the holiday period. Obviously, this isn’t entirely the result of thanksgiving, it started before and not enough has been done to bring it under control, as we saw earlier in the year. The next couple of month will get ugly and the vaccines will do little to change that,” said Craig Erlam at OANDA Europe.

“All the more reason why it’s essential that Congress puts aside differences and finds agreement on a stimulus programme before the end of the year when past programmes expire. The bipartisan package put forward a couple of weeks ago may be the basis for what will be agreed and lawmakers are running out of time to make whatever concessions is necessary,” he added.

On the subject of coronavirus cases, the US reported a worrying 224,000 new cases yesterday, was a record level for daily cases, albeit up a mere 3.1% week-on-week, which represents a slowing in the growth rate after Wednesday’s 10.6% increase and Tuesday’s 19.5% surge.

“The seven-day average appears to be flattening, but this might just be due to last week’s post-Thanksgiving catch-up in testing dropping out of the calculation. We’ll have a much better idea of the underlying trend by early next week, but for now, it is fair to say that the spike after the holiday has been smaller than we feared,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“The rate of change of hospitalisations has nudged up slightly in recent days, thanks to the upturn in cases since Thanksgiving, but daily deaths are still reflecting the sharp rising trend in cases before the holiday. Deaths, therefore, likely will rise substantially further even if cases now run flat,” Shepherdson said.

Four things to watch for on Friday:

• The macro calendar has a few snippets of data today including the US producer prices index (PPI), which provide insight on prices at the gates of American factories. Forecasts are estimating that the PPI will show a 0.2% rise in November compared to 0.3% in October
• Also in the diary is the Michigan consumer sentiment data for December, which is forecast to show a decline to 76 from 76.9 in November
• Share price reaction may also be eyed from media giant Walt Disney Co (NYSE:DIS) after the group unveiled a slate of upcoming new content for the coming years alongside a surge in customers signing up to its Disney+ streaming service
• Investors may also be eyeing Pfizer Inc (NYSE:PFE) following news that the FDA is planning to grant emergency use authorisation for its COVID-19 vaccine, developed in partnership with BioNTech

Story by ProactiveInvestors