Dow, S&P 500 Modestly Lower In Mid-Day Trading, Nasdaq Slightly Higher

After moving to the downside early in the session, stocks have turned in a relatively lackluster performance over the course of the trading day on Friday. While the Dow and the S&P 500 have remained in negative territory, the Nasdaq has edged slightly higher.

The Nasdaq has pulled back off its best levels in recent trading but is currently up 3.90 points or less than a tenth of a percent at 3.90 points or less than 0.1 percent at 11,908.62. Meanwhile, the Dow is down 135.30 points or 0.5 percent at 29,347.93 and the S&P 500 is down 9.91 points or 0.3 percent at 3,571.96.

The declines by the Dow and the S&P 500 partly reflect concerns about the near-term economic outlook amid a continued spike in new coronavirus cases in the U.S.

The latest data from John Hopkins University showed nearly 188,000 new coronavirus cases on Thursday, while the daily death toll topped 2,000 for the first time.

The continued surge in new cases, hospitalizations and deaths in the U.S. has raised concerns new restrictions and lockdowns will dampen the economy recovery.

While there continues to be upbeat news on the vaccine front, traders seem worried about an economic downturn the months leading up to the widespread distribution of a vaccine.

Adding to the economic uncertainty, Treasury Secretary Steven Mnuchin announced a decision to allow five of the Federal Reserve’s nine emergency lending programs to expire at year end.

The Fed responded to the decision in a rare public statement, saying it would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for the still-strained and vulnerable economy.

While Mnuchin has argued he is following the intent of Congress, Gregory Daco, Chief U.S. Economist at Capital Economics, suggested the Treasury Secretary is hoping lawmakers will consider reallocating the unused funds for new stimulus measures.

“However, with partisanship in Congress preventing the delivery of urgently needed fiscal aid, and low rates negating any imminent debt servicing concern, Mnuchin’s justification appears poorly grounded,” Daco said.

He added, “And, it may backfire by leaving the Fed as the only adult in the room to address a concerning economic situation in the final stages of 2020.”

Sector News

Most of the major sectors are showing only modest moves on the day, although substantial weakness remains visible among airline stocks.

Reflecting the weakness in the airline sector, the NYSE Arca Airline Index is down by 2.1 percent after ending the previous session at its best closing level in well over eight months.

Oil service stocks have also shown a significant move to the downside over the course of the trading day, dragging the Philadelphia Oil Service Index down by 1.6 percent. The index ended Thursday’s trading at a three-month closing high.

The pullback by oil service stocks comes amid a modest decrease by the price of crude oil, with crude for December delivery edging down $0.07 to $41.67 a barrel.

Considerable weakness has also emerged among banking stocks, as reflected by the 1.4 percent drop by the KBW Bank Index.

Tobacco and housing stocks are also seeing notable weakness on the day, while strength among networking and semiconductor stocks is contributing to the uptick by the tech-heavy Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific once again turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index rose by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index edged up by 0.3 percent, the German DAX Index and the French CAC 40 Index both climbed by 0.4 percent.

In the bond market, treasuries have given back ground after an initial advance but remain slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.3 basis points at 0.841 percent.

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