By Syndication Washington Post, Bloomberg · Claire Ballentine
The energy and financial sectors led the S&P 500 into the red for a second day, with Exxon Mobil Corp. dropping 4.8% after a report said the company is being investigated for overvaluing assets. Utilities and real estate shares rose. Stocks were already lower in Europe and Asia as President-elect Joe Biden's much-anticipated $1.9 trillion covid-19 relief plan came under scrutiny. Treasury yields declined.
Optimism about the U.S. aid package had helped spur the so-called reflation trade, but the plan is far from a done deal. Biden's proposal could be watered down under congressional opposition, and there's the possibility that some taxes could rise.
"There's just a realization that this is a starting point for negotiations -- there's a little bit of a reality that this isn't going to be a smooth quick process," said John Porter, head of equities at Mellon Investments Corp.
Biden's "American Rescue Plan" includes a wave of new spending, more direct payments to households, an expansion of jobless benefits and an enlargement of vaccinations and virus-testing programs as deaths reach record levels and local governments expand lockdowns.
Attention is now turning to how much of the package will ultimately get passed by Congress, with the go-big price tag and the inclusion of proposals set to be opposed by many Republicans. As lawmakers wrangle over details, U.S. jobless claims published Thursday painted a dismal picture and the U.S. is leading all countries in virus deaths with New York state reporting more than 200 daily fatalities for the first time since May.
"With a big number on the heels of a $9 billion package, it's not going to be easy to get the next stimulus package passed," said James Ragan, director of wealth management research at D.A. Davidson. "I think a combination of that and the weakening consumer data is causing the pause today. It was kind of inevitable, we've had a pretty strong run to start the year. Maybe a little more caution going into the long weekend."
U.S. financial markets are closed Monday for the observance of Martin Luther King holiday.
These are some of the main moves in markets:
The S&P 500 Index dipped 0.7% to 3,768.25 as of 4:02 p.m. EST, the lowest in more than a week on the largest decrease in more than a week.
The Nasdaq Composite Index declined 0.9% to 12,998.50, the lowest in more than a week.
The Dow Jones industrial average dipped 0.6% to 30,814.26, the lowest in more than a week on the largest decrease in more than a week.
The Stoxx Europe 600 Index sank 1% to 407.85, the lowest in more than a week on the biggest tumble in more than three weeks.
The MSCI All-Country World Index sank 0.9% to 655.71, the lowest in more than a week on the largest decrease in 11 weeks.
The Bloomberg Dollar Spot Index gained 0.6% to 1,126.29, the biggest rise in more than a week.
The euro sank 0.6% to $1.2076, the weakest in more than six weeks on the largest decrease in more than two weeks.
The Japanese yen weakened 0.1% to 103.89 per dollar.
The yield on 10-year Treasurys declined four basis points to 1.09%.
Germany's 10-year yield increased one basis point to -0.54%.
Britain's 10-year yield decreased less than one basis point to 0.288%, the lowest in more than a week.
West Texas Intermediate crude sank 2.6% to $52.19 a barrel, the lowest in more than a week on the biggest tumble in more than three weeks.
Gold depreciated 1.1% to $1,826.30 an ounce, the weakest in more than six weeks on the largest fall in a week.