Wall Street closed mixed on Friday following uncertainty regarding a fresh fiscal stimulus by the U.S. government. The S&P 500 and the Nasdaq Composite ended in the red while the Dow managed to finish in positive territory. For the week as a whole, all the three major stock indexes ended in negative zone.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.2% to close at 30,046.37. Notably, 21 components of the 30-stock index ended in the red while 8 in green and 1 remained unchanged. However, the Nasdaq Composite finished at 12,377.87, dropping 0.2% or due to weak performance by large-cap stocks.
Meanwhile, the S&P 500 lost 0.1% to end at 3,663.46. The Energy Select Sector SPDR (XLE) and the Financials Select Sector SPDR (XLU) retreated 1.2% and 1%, respectively. Notably, six out of eleven sectors of the benchmark index closed in the red and five in green.
The fear-gauge CBOE Volatility Index (VIX) was up 3.5% to 23.31. A total of 9.92 billion shares were traded on Friday, lower than the last 20-session average of 11.48 billion. Decliners outnumbered advancers on the NYSE by a 1.42-to-1 ratio. On Nasdaq, a 1.47-to-1 ratio favored decliners issues.
Uncertainty on New Fiscal Stimulus
The U.S. Congress is yet to reach an amicable solution related to a fresh tranche of coronavirus-aid package before the end of this year. The Democrats have rejected the $916 billion aid offered by the U.S. government, citing that it doesn’t include any additional federal unemployment insurance money. The Republicans have supported the bill.
On Dec 1, a bipartisan group of lawmakers proposed a $908 billion fresh coronavirus-aid package. The major components of the proposed bipartisan relief bill includes $160 billion for state, local and tribal governments, $180 billion for additional unemployment insurance, and $288 billion as support to small businesses including the Paycheck Protection Program.
However, Senate Majority Leader Mitch McConnell said he wants to pass a new stimulus excluding legal immunity for businesses or aid for state and local governments. He agreed to offer a new unemployment benefit scheme and Paycheck Protection Program small business loans. Meanwhile, the U.S. Senate, unanimously approved a one-week extension of federal funding to avoid a government shutdown and to provide more time for separate negotiations on COVID-19 relief bill.
Consequently, shares of reopening stocks like Carnival Corporation & Plc (CCL – Free Report) , United Airlines Holdings Inc. (UAL – Free Report) , The Gap Inc. (GPS – Free Report) and Hyatt Hotels Corp. (H – Free Report) plummeted 4.5%, 2.6%, 3.6% and 1.4%, respectively. The Gap carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Department of Commerce reported that producer price index (PPI) inched up 0.1% in November after growing 0.3% in October. November’s data was in line with the consensus estimate. Notably, this was the smallest increase in PPI in seven months. Year to date, PPI increased 0.8% in November compared with 0.5% in October.
The core (excluding volatile items) PPI increased 0.2% in November, in line with the consensus estimate. Year to date, the core PPI increased 0.9% in November compared with 0.8% in October.
The University of Michigan reported that its preliminary estimation for the U.S. consumer sentiment in December came in at 81.4 compared with 76.9 in November. The consensus estimate was 76.
A sub-index that measures current conditions increased to 91.8 in December from 87 in November, marking its nine-month high. Another sub-index that measures expectations for the next six months also increased to 74.7 in December from 70.5 in November.
Last week was a disappointing one for Wall Street. The Dow, the S&P 500 and the Nasdaq Composite declined 0.6%, 1% and 0.7%, respectively. Massive spike of new COVID-19 cases in several states of the United States and lingering concerns about the approval of the second coronavirus-aid package were predominantly responsible for stock markets weakness.
Stocks That Have Mead Headline
State Street (STT – Free Report) is mulling strategic options for its asset management business — State Street Global Advisors. The options include a potential divestiture of the division. (Read More)
Huntington Bancshares Inc. (HBAN – Free Report) recently entered into an all-stock acquisition deal with Detroit-based TCF Financial Corp. (TCF – Free Report) , per which the former will merge with the latter with a total market value of about $22 billion. (Read More)
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