Wall Street closed lower on Friday as concerns regarding slow vaccination process and mixed economic data overshadowed President elect Joe Biden's proposed $1.9 trillion coronavirus-aid package. All the three major stock indexes ended in negative territory. For the week as a whole, these indexes ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average DJI dropped 0.6% or 177.26 points to close at 30,814.26. Notably, 21 components of the 30-stock index ended in the red while 9 in green. Meanwhile, the Nasdaq Composite finished at 12,998.50, sliding 0.9% or 114.14 points due to weak performance by large-cap stocks.
Moreover, the S&P 500 lost 0.7% to end at 3,768.25. The Energy Select Sector SPDR XLRE and the Financials Select Sector SPDR XLF declined 3.9% and 1.7%, respectively. Notably, seven out of eleven sectors of the benchmark index closed in the red and four in green.
The fear-gauge CBOE Volatility Index VIX was up 4.7% to 24.34. A total of 14.12 billion shares were traded on Friday, higher than the last 20-session average of 12.76 billion. Decliners outnumbered advancers on the NYSE by a 2.20-to-1 ratio. On Nasdaq, a 2.24-to-1 ratio favored declining issues.
Proposal of a New Coronavirus Relief Package
On Jan 14, President elect Joe Biden proposed a new $1.9 trillion coronavirus-aid package called “American Rescue Plan”. The proposed plan will include increasing direct payments to $2,000 from existing $600 and supplemental unemployment benefits to $400 per week through September. Minimum wage rate to be hiked to $15 per hour and moratoriums on eviction and foreclosure on mortgages to be extended to Sep 30.
The plan will include $20 billion for a national vaccination program, $50 billion for COVID testing, and $350 billion aid to state and local governments. In addition, the plan will provide $130 billion for reopening of schools, $35 billion for higher education and $5 billion for a “Hardest Hit Education Fund.
Concerns on Slow Rollout of Vaccines
On Jan 15, Pfizer Inc. PFE said that it will slow down the delivery of its COVID-19 vaccine to Europe for the time being. The company will upgrade its COVID-19 vaccine production facility to 2 billion doses per annum. Pfizer carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Department of Commerce reported that retail sales declined 0.7% in December in contrast to the consensus estimate of an increase to 0.1%. November's data was revised downward from a decline of 1.1% to 1.4%. Notably, retail sales has declined for the third straight months.
The core retail sales (excluding automobiles) dropped 1.4% compared with the consensus estimate of a decline of 0.1%. November's core retail sales revised downward from a decrease of 0.9% to a decrease of 1.3%. Notably, core retail sales correspond most closely with the consumer spending component of the U.S. GDP.
Industrial production jumped 1.6% in December compared with the consensus estimate of 0.4%. November's data was revised upward from 0.4% to 0.5%. Manufacturing output rose 0.9%, marking its rise for eighth consecutive months. Mining output increased 1.6% while utility productions climbed 6.2%. For the fourth-quarter 2020, industrial production climbed 8.4% annually.
Capacity utilization increased to 74.5% in December compared with the consensus estimate of 73.5%. November's data was revised upward from 73.3% to 73.4%.
Producers price index (PPI) in December increased 0.3% in-line with the consensus estimate. PPI rose 0.1% in November. The core PPI grew 0.5% in December compared with 0.2% in November and the consensus estimate of 0.1%.
The University of Michigan reported that the preliminary reading of the U.S. consumer sentiment decreased to 79.2% in January from 80.7% in December.
Weekly Roundup
Last week was a disappointing one for Wall Street. Both the S&P 500 and the Nasdaq Composite lost 1.5%. The Dow dropped 0.9%. All three indexes recorded sharpest weekly decline since the week ended Oct 30. Growing numbers of coronavirus infections and slowdown of U.S. economic recovery were main reasons for stock market's weak performance.
These Stocks Are Poised to Soar Past the Pandemic
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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