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Stocks drift after stimulus deal as virus worries still loom

UPDATED: Tue., Dec. 22, 2020

This photo from Nov. 23, 2020, shows the New York Stock Exchange. U.S. stock indexes capped a day of choppy trading with a mixed finish Thursday.  (Associated Press)
This photo from Nov. 23, 2020, shows the New York Stock Exchange. U.S. stock indexes capped a day of choppy trading with a mixed finish Thursday. (Associated Press)
By Stan Choe Associated Press

NEW YORK — Stocks were drifting in mixed trading on Wall Street after Congress finally approved a $900 billion rescue to carry the economy through what’s likely to be a bleak winter.

The S&P 500 was crossing between small gains and losses and was 0.2% lower in midday trading, a day after worries about a new, potentially more infectious strain of the coronavirus dragged markets through tumultuous trading. The Dow Jones Industrial Average was down 136 points, or 0.4%, at 30,080, as of 12:02 p.m. Eastern time, and the Nasdaq composite was 0.1% higher. Thin trading ahead of a holiday-shortened week could make the market’s moves erratic.

After months of bickering, Congress approved a deal on Monday night to send $600 cash payments to most Americans, give $300 per week to laid-off workers and deliver other aid to businesses struggling under the weight of the pandemic. The bill is going to President Donald Trump’s desk for his signature.

The hope for investors is that such support can prop up the economy for the next several months, before a more widespread rollout of coronavirus vaccines can allow it stand on its own. That expectation has been driving markets for a while, but a new worry is casting some doubt on it.

A new strain of the coronavirus has emerged, one that has caught hold in at least London and southern England. There’s no evidence that it’s more deadly, but it seems to spread more easily. Worries are high enough about it that countries around the world have restricted flights from London, raising concerns that more economy-punishing lockdowns may be on the way.

Helping to keep the worries in check was the CEO of BioNTech, the German company that developed a coronavirus vaccine with Pfizer. Ugur Sahin said it “is highly likely” that his company’s vaccine can protect against the new variant, though further studies are needed to be sure. The United States has already approved the company’s vaccine for use, and the European Union recently followed suit.

Even without the new coronavirus strain, the resurgent pandemic has already been dragging on the U.S. economy, which had roared to a record annualized pace of 33.4% growth during the summer. Two reports on some of the economy’s most important areas added to the growing pile of discouraging data on Tuesday.

One showed that confidence among U.S. consumers dropped this month, and the reading was well below what economists had forecast. That’s discouraging for an economy driven largely by consumers spending. Another showed that even the red-hot housing market is showing signs of slowing. The reading on sales of previously occupied homes roughly matched economists’ expectations.

Such worries have caused momentum to slow for the stock market, which set record highs last week, after earlier surging on hopes that COVID-19 vaccines will trigger a return to normal for the economy next year and that Washington would approve big stimulus to tide the economy over until then.

More stocks were falling in the S&P 500 than rising in Tuesday morning trading, but healthy gains for some of the index’s most influential stocks overshadowed them. Apple rose 2.5%, for example. Because it’s the biggest company in the index by market value, its movements carry more sway on the S&P 500 than any other stock.

Travel-related companies were among those taking the hardest hits, again, amid worries about more restrictions on movement. Norwegian Cruise Line lost 5.7%, and American Airlines Group sank 3.5%.

CarMax fell 7.6% for one of the largest losses in the S&P 500 despite reporting stronger profit and revenue for the latest quarter than analysts expected. It said that sales trended downward toward the end of the quarter as coronavirus cases mounted. It also said its stores open more than a year sold fewer used cars during the quarter than analysts expected.

In overseas stock markets, European indexes regained some of their sharp drops from the day before. France’s CAC 40 rose 1.4%, and Germany’s DAX returned 1.3%. The FTSE 100 in London added 0.6%.

Shares retreated in Asia after the U.S. Commerce Department announced it was including 103 entities on a new “Military End User” list, including 58 Chinese and 45 Russian companies. Such a designation requires special licensing for exports and other sales of designated products to the listed companies to prevent certain technologies from being used by foreign militaries in China, Russia or Venezuela, it said.

Many of the companies are related to aviation and shipbuilding. The list adds to strains between Washington and Beijing, which already are feuding over technology, security and other issues.

Stocks in Shanghai lost 1.9%, and Hong Kong’s Hang Seng fell 0.7%. Tokyo’s Nikkei 225 dropped 1%, and South Korea’s Kospi declined 1.6%.

The yield on the 10-year Treasury slipped to 0.92% from 0.93% late Monday.

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