February 15, 2025

error page

Business is my step

Dow dips more than 100 points as new coronavirus strain overshadows fiscal relief deal

4 min read

U.S. stocks were on the back foot at Monday noon as investors focused on the emergence of a possible fast-spreading variant of the strain of coronavirus that causes COVID-19, overshadowing optimism from the weekend after U.S. lawmakers agreed on a pandemic-relief deal.

On a short Christmas week, investors also are monitoring the first day of trade for Tesla Inc. The electric car-maker’s stock, which officially entered the S&P 500 on Friday, accounts for 1% of the broad-market index at its market value of over $600 billion.

How are stock benchmarks performing?
  • The Dow Jones Industrial Average
    DJIA,
    +0.26%
    fell 121 points, or 0.4%, to 30,057, but off its worst intraday level of 29,755.53.

  • The S&P 500
    SPX,
    -0.32%
    slid 38 points, or 1%, to 3,671.

  • The Nasdaq Composite
    COMP,
    -0.17%
    tumbled 114 points, or 0.9%, to 12,640.

On Friday, the stock market closed higher for the week:

  • The Dow posted a weekly gain of 0.4%

  • The S&P 500 index rose 1.3%

  • The Nasdaq closed out the week 3.1% higher

What’s driving the market?

Market participants started Christmas week trade contending with reports from Britain and South Africa of a possible new strain of coronavirus that, so far, caused parts of London to implement tighter lockdown and social-distancing procedures. In addition, governments of European Union instituted restrictions on inbound flights from the U.K.

The pullback in equities comes even as experts warn against overreacting and note that no evidence indicates that the variant is a more virulent strain of COVID-19, even if it is more contagious.

“Fiscal stimulus is clearly fading as a catalyst, with COVID trends dictating the direction of markets. Risk assets had been shrugging off worsening virus trends, but are now showing some signs of vulnerability – even with the backstop of additional stimulus,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management, in emailed comments.

And with markets near record highs and valuations appearing stretched, stocks were vulnerable to shifts in investor sentiment, said Chris Larkin, managing director of trading and investing product at E*TRADE Financial.

The new concerns about the virus comes ahead of an expected vote on a fiscal spending bill that is paired with fresh aid for out-of-work Americans and businesses that have been devastated by the pandemic.

See: What could rattle markets in 2021, even as vaccines are rolling out

Over the weekend, Senate Majority Leader Mitch McConnell, R-Ky., said a deal had been reached on an almost $900 billion coronavirus relief package and a vote on the bill is set for later Monday.

“Make no mistake about it, this agreement is far from perfect. But it will deliver emergency relief to a nation in the throes of a genuine emergency,” said Senate Democratic Leader Chuck Schumer.

Peter Cardillo, chief market economist at Spartan Capital Securities said that the “markets decline has [nothing] to do with the long-awaited stimulus package agreement struck by lawmakers, but rather the run-away virus situation in Great Britain and Europe’s new travel restrictions.”

Meanwhile, markets are watching the first trading day for Tesla Inc.
TSLA,
-4.54%
as a member of the S&P 500 index, marking one of the largest and, perhaps, volatile members to enter the broad-market index.

Investors saw some second-tier economic data. The Chicago Federal Reserve’s gauge of national economic activity declined to 0.27 in November from 1.01 in October.

Which companies are in focus?
  • Shares of Monmouth Real Estate Investment Corp.
    MNR,
    +3.12%
     rose 3.8% after investment management firm Blackwells Capital LLC said it made an unsolicited bid to buy Monmouth.

  • CVS Health Corp.
    CVS,
    -1.15%
     said Monday that it will begin COVID-19 vaccinations at long-term health facilities across the country.

  • Tesla Inc. shares were down over 4%.

  • HMS Holdings Corp.
    HMSY,
    +8.17%
     gained over 8% after it announced it would be acquired by Gainwell Technologies in a deal valuing the health care services company at about $3.4 billion.

  • Lockheed Martin
    LMT,
    -0.97%
    is buying rocket engine manufacturer Aerojet Rocketdyne Holdings for $4.4 billion. Lockheed’s shares were down 1.1%.

  • Financial shares were gaining on Monday after the Federal Reserve authorized banks to resume share buybacks next year. JP Morgan Chase
    JPM,
    +4.88%
    was up 4.3% and Bank of America Corp.
    BAC,
    +4.43%
    was up 2.5%.

What are other markets doing?
error-page.com © All rights reserved. | Newsphere by AF themes.