Benchmarks closed mixed on Monday after news regarding a fast-spreading mutation of coronavirus strain sparked fear across Europe and weighed on investors’ sentiment. Meanwhile, lawmakers in the United States reached an agreement on a $900 billion relief package.
The Dow Jones Industrial Average (DJI) rose 37.40 point, or 0.1%, to close at 30,216.45 and the S&P 500 fell 14.49 points, or 0.4%, to close at 3,694.92. The Nasdaq Composite Index closed at 12,742.52, declining 13.12 points, or 0.1%. The fear-gauge CBOE Volatility Index (VIX) increased 16.6%, to close at 25.16. Declining issues outnumbered advancing ones for 4.97-to-1 ratio on the NYSE and a 2.98-to-1 ratio on the Nasdaq favored decliners.
How Did the Benchmarks Perform?
Of the 11 major sectors of the S&P 500, nine ended in the red with the energy sector declining the most by 1.8% on Monday. Concerns over decreasing demand of fuel lead to decline in crude prices. Shares of Chevron Corporation (CVX – Free Report) and Exxon Mobil Corporation (XOM – Free Report) closed 1.3% and 1.8% lower for the day, respectively. Both Chevron and Exxon Mobil carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Federal Reserve authorized major lenders to pay out dividends and buy back stock on a limited basis following a stress test and this helped the financial stocks close in the green for the session. The S&P 500 financial sector closed 1.2% higher and shares of The Goldman Sachs Group, Inc. (GS – Free Report) rose 6.1%, it was one of the biggest gainers of the Dow.
Overall, the S&P 500 posted five new 52-week highs and no new lows, while the Nasdaq Composite recorded 78 new highs and 14 new lows.
News on More-virulent Strain of COVID-19 Spooks Traders
On Monday, news surrounding a more-virulent strain of the coronavirus in Britain sparked fears. The virus strain is said to have a characteristic of up to 70% more transmissible than the original COVID-19 strain. Many European countries have reacted by issuing new restrictions on inbound flights from the United Kingdom. Tough experts have reported that there has been no evidence that indicates the variant is a more virulent strain of COVID-19 or even if it is more contagious. Investors’ sentiment has weighed down as implementation of tighter lockdown and social-distancing procedures could put a halt on economic rebound.
Travel-related stocks are among the hardest hit by this new restriction and shares of American Airlines Group Inc. (AAL – Free Report) and Norwegian Cruise Line Holdings Ltd. (NCLH – Free Report) closed 2.5% and 1.6% lower, respectively on Monday.
Lawmakers Agree on Fresh Stimulus Package
US Congress reached an agreement on a $900 billion relief package on Sunday. On Monday, Treasury Secretary Steven Mnuchin said that the government would begin to send out $600 checks to millions of Americans by next week with enhanced jobless benefits. The fresh stimulus package includes an extension of pandemic-related federal unemployment programs along with revival of an add-on payment for the jobless, which is $300 a week for 11 weeks.
The bill includes a $284 billion for a second round of the Paycheck Protection Program and $15 billion in grants for live entertainment venues and promoters, and performing arts groups and operators of movie theaters and museums. Additionally, schools and colleges will receive $82 billion to cope with the pandemic and make their facilities safer. Airlines carriers are poised to receive $15 billion in new payroll assistance as part of a new coronavirus stimulus package.
Stocks that Made Headline
Diamondback (FANG – Free Report) Inks Acquisition Deal With QEP Resources
Diamondback Energy, Inc. (FANG – Free Report) has reached an agreement to acquire QEP Resources (QEP) in an all-stock deal worth $2.2 billion comprising $1.6-billion net debt as of Sep 30. (Read More)
Shell (RDS.A – Free Report) Renews Q4 View, Foresees $3.5-$4.5B Write-Offs
Royal Dutch Shell (RDS.A – Free Report) recently provided an update on its fourth-quarter 2020 guidance and envisioned its post-tax impairment charges between $3.5 billion and $4.5 billion for the period. (Read More)
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