U.S. stock markets closed lower on Tuesday on concerns of coronavirus resurgence. Market participants also remained skeptical regarding Congressional approval for the second round of fiscal stimulus in this year. All the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.6% or 167.09 points to close at 29,783.35, reversing two days of winning streak. Notably, 24 components of the 30-stock index ended in the red while six in green. The major loser of the Dow was Walgreens Boots Alliance Inc. WBA plummeting 9.6%. Walgreens Boots carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, the S&P 500 fell 0.5% to end at 3,609.53, ending two days of winning run. The Energy Select Sector SPDR (XLE) gained 1% while the Utilities Select Sector SPDR (XLU) tumbled 2%. Notably, nine out of eleven sectors of the benchmark index closed in red and two in the green.
Moreover, the Nasdaq Composite finished at 11,899.34, dropping 0.2% due to weak performance by technology stocks. This was the first negative close of the tech-heavy index in last three days. However, the small-cap centric Russell 2000 Index soared 6.6% to close at 1,791.91, its highest closing on record. During the intraday trading, the index hits a fresh all-time high at 1,795.89.
The fear-gauge CBOE Volatility Index (VIX) was up 1.2% to 22.71. A total of 10.46 billion shares were traded on Tuesday, higher than the last 20-session average of 10.3 billion. Advancers outnumbered decliners on the NYSE by a 1.30-to-1 ratio. On Nasdaq, a 1.07-to-1 ratio favored advancing issues.
Significant Spike in COVID-19 Infections
Per the COVID Tracking Project in the United States, both new cases and hospitalizations set records, respectively, topping 150,000 and nearly 77,000 on Nov 17. Total U.S. cases have crossed 11 million and the death toll stands at nearly 240,000. New cases are rising in 50 states and territories.
The Governor of New York Andrew Cuomo ordered bars, restaurants and gyms to close at 10 P.M. starting Nov 13. The mayor of Chicago advised people to stay at home or work from home, apart from essential travel and business, from Nov 16 for 30 days. California Governor Gavin Newsom said that his administration is considering a statewide curfew owing to a surge in COVID-19 cases.
Uncertainty on Fresh Fiscal Stimulus
More than two weeks after the U.S. presidential election, the final result is yet to be announced. In the meantime, the Trump administration has decided not to negotiate further with Democrat House Speaker Nancy Pelosi regarding a new stimulus. Instead, Senate Majority Mitch McConnell will be the Republican negotiator, who is well known for his tough stand on a new tranche of coronavirus-aid package.
The Department of Commerce reported that retail sales in October increased 0.3%, lagging the consensus estimate of 0.4%. September’s retail sales data was revised downward to 1.6% from 1.9% reported earlier.
Core retail sales (excluding automobiles, gasoline, building materials and food services) grew 0.1% in October, missing the consensus estimate of 0.3%. September’s core retail sales data was revised downward to 0.9% from 1.4% reported earlier. Notably, the core retail sales data correspond most closely with the consumer spending component of the U.S. GDP.
The Department of Labor reported that import prices fell 0.1% in October, while the consensus estimate was for static figure. September’s import prices revised downward from a gain of 0.3% reported earlier to 0.2%. Year over year, import prices fell 1% in October after declining 1.4% in September.
Export prices rose 0.2% in October, beating the consensus estimate of 0.1%. Year over year, export prices decreased 1.6% in October after declining 1.8% in September.
The National Association of Home Builders’ Wells Fargo Housing Market Index came in at a record-breaking 90. Any reading above 50 is positive for the industry. The current sales conditions index rose 6 points to 96. Sales expectations index for the next six months increased 1 point to 89 and the buyer traffic index advanced 3 points to 77.
Industrial Production climbed 1.1% in October, surpassing the consensus estimate of 1%. September’s data was revised upward from a decline of 0.6% to a decline of 0.4%. However, industrial production is still 5.6% below its pre-pandemic level. Manufacturing productions grew 1%, utility output surged 3.9% while mining activities decreased 0.6%.
Capacity utilization in October increased to 72.8%, outpacing the consensus estimate of 72.3%. September’s data was revised upward from 71.5% to 72%.
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