Dow pulls back from record, S&P 500 finishes lower on doubt about vaccine distribution
U.S. stocks finished mostly higher Thursday, but pulled back from record intraday highs on a report of distribution issues with Pfizer’s coronavirus vaccine.
Investors also focused on the revived prospects for another financial aid package from Congress to support the economic recovery and will turn their attention to the monthly employment report Friday morning.
What are major benchmarks doing?
The Dow Jones Industrial Average DJIA, +0.28% rose 85.73 points, or 0.3%, to 29,969.52, after clinching a new intraday record high of 30,110.88.
The S&P 500 index SPX, -0.06% fell 2.29 points, or less than 0.1%, to end at 3,666.72, after setting a new intraday peak of 3,682.73.
The Nasdaq Composite Index COMP, +0.22% picked up 27.82 points, or 0.2%, to 12,377.18, booking a new all-time closing high and carving out a record intraday high at 12,439.02 in early action Thursday.
The Dow gained 59.87 points, or 0.2%, to close at 29,883.79.
The S&P 500 rose 6.56 points, or 0.2%, to eke out a second consecutive record close at 3,669.01.
The Nasdaq Composite gave up 5.74 points, a decline of less than 0.1%, to end at 12,349.37.
What’s driving the market?
U.S. stock indexes came off session highs on Thursday after Pfizer Inc. PFE, -1.74% said it expected to ship only half of the vaccines it had planned to deliver this year. Still, the vaccinemaker expects to roll out more than a billion doses next year.
Pfizer said it ran into supply chain issues, and that some early shipments of raw materials for the vaccines failed to meet standards, according to the Wall Street Journal. The pharmaceutical’s shares fell 1.7%.
Equities initially took a leg higher on Thursday after the U.S. Senate Majority Leader Mitch McConnell said reaching a compromise on another coronavirus fiscal package was possible, as long as Democrats moved toward Republican positions.
“Compromise is within reach. We know where we agree. We can do this,” the Kentucky Republican said.
A bipartisan group of lawmakers earlier this week proposed a $908 billion plan, but hopes for a deal were dealt a blow after McConnell indicated he remained in favor of a smaller package near $500 billion.
Democratic leaders, who had previously called for a much bigger package of more than $2 trillion, endorsed the bipartisan proposal on Wednesday. Analysts warned of the potential for disappointment.
Investors have eagerly been awaiting progress toward a deal because the next phase of the economic recovery, and further market gains in 2020 and early next year, hinge on it, analysts say.
“Expectations of a holiday pandemic relief bill are offsetting the immediate pain the coronavirus is having on the economy,” wrote Edward Moya, senior market analyst at Oanda, in a Thursday note.
Still, some remain skeptical.
“Time is running out to pass a bill before Congress breaks, the $908 billion bipartisan proposal has yet to be written into a draft legal text and is likely to come up against resistance from Senate Republicans who prefer a smaller package,” wrote analysts at UniCredit Bank, in a note.
“In our view, the chances of a deal before year-end have increased, but our base case remains that a deal is more likely to be agreed in January/February under the new administration,” they said.
The negotiations in Washington come as investors parse an employment report that showed that weekly claims for unemployment benefits claims fell by 712,000 last week, compared with estimates of 780,000, the Labor Department said Thursday. However, the pace of hiring is slowing, with the daily death rate from COVID-19 reaching a record Wednesday, even as the hope of a vaccine rises.
In other U.S. economic news, the Institute for Supply Management services index fell to 55.9% in November from 56.6% in October and been expected to tick down to 56.4%. A reading of more than 50% indicates an expansion in activity. The IHS Markit services gauge came in at 58.4 for November versus initial 57.7.
On Friday investors will focus on the monthly U.S. employment report from the Labor Department. Economists polled by MarketWatch forecast a 438,000 increase in new jobs in November, though this would be the smallest increase in new jobs since the U.S. economy reopened from lockdowns in May.
Meanwhile, COVID-19 cases continue to rise. The U.S. tallied 199,988 new cases on Wednesday, and at least 2,885 people died, according to a New York Times tracker, the most in a single day since the start of the outbreak began earlier this year, while a record 100,226 COVID-19 patients were in U.S. hospitals on Wednesday.
The spike in infections prompted Los Angeles Mayor Eric Garcetti to sound the alarm and urged from residents to stay home as the virus rages in the city.
“If it isn’t essential, don’t do it. Don’t meet up with others outside your household. Don’t host a gathering. Don’t attend a gathering,” the mayor said Wednesday night.
Which companies are in focus?
3M Co. MMM, -0.01% announced a restructuring that it said would affect 2,900 jobs globally as the Post-it maker and diversified industrial company moves to align operations with the changing economy in the face of the coronavirus pandemic. Shares were flat.
Express Inc. EXPR, -25.94% shares dropped 26.6% after the apparel retailer missed earnings estimates for the third quarter, said it would cut 10% of staff at its corporate headquarters and that it would pursue liquidity measures, as it deals with the impact of the coronavirus pandemic.
Splunk Inc. SPLK, -23.25% shares fell 26% after the software-platform provider said late Wednesday that its loss widened in the third quarter on higher expenses and lower sales as customers weigh their IT infrastructure spending after months of remote working due to the pandemic.
Shares of Delta Air Lines Inc. DAL, +4.57% added 4.6% Thursday, which puts it on track for an 8-month high, after the provided a daily cash-burn outlook for the fourth quarter that could be half of that averaged in the third-quarter.
How other assets are faring?
In Asian markets, China’s Shanghai Composite Index SHCOMP, -0.21% finished 0.2% lower, the CSI 300 000300, -0.19% finished 0.2% lower, while Hong Kong’s Hang Seng HSI, +0.73% booked a 0.7% gain. Japan’s Nikkei 225 NIK, +0.03% ended less than 0.1% higher on Thursday.
The ICE U.S. Dollar Index, a gauge of the greenback’s strength against its major rivals, was 0.5% lower.
Crude-oil futures CL.1, +0.92% gained 36 cents, or 0.8% to settle at $45.64 per barrel on the New York Mercantile Exchange. Meanwhile, gold GC00, +0.77% rose $10.90, or 0.6%, to settle at $1,841.10 an ounce.
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