U.S. Stocks Pull Back As Stimulus Negotiations Drag On

(RTTNews) - Stocks staged a recovery attempt late in the trading session on Friday but still ended the day lower following the advance seen in the previous session. The major averages finished the day in the red after reaching record intraday highs at the start of trading.

The major averages all closed lower, although the tech-heavy Nasdaq posted only a modest loss, edging down 9.11 points or 0.8 percent to 12,755.64. The Dow slid 124.32 points or 0.4 percent to 30,179.05 and the S&P 500 fell 13.07 points or 0.4 percent to 3,709.41.

Despite the drop on the day, the major averages all moved higher for the week. The Nasdaq soared by 3.1 percent, the S&P 500 jumped by 1.3 percent and the Dow rose by 0.4 percent.

The pullback on Wall Street partly reflected profit taking, as traders cashed in on recent gains after yesterday's climb to record closing highs.

Optimism about a new fiscal stimulus bill contributed to the strength on Thursday, although traders may be waiting for more concrete developments before continuing to push stocks higher.

In remarks on the Senate floor, Senate Majority Leader Mitch McConnell, R-Ken., said an agreement on a new relief package appears to be "close at hand" and suggested lawmakers are likely to work through the weekend to reach a deal.

House Speaker Nancy Pelosi, D-Calif., also told reporters that progress has been made toward an agreement, mirroring other recent optimistic comments from congressional leaders.

Along with agreeing on a new relief package, lawmakers also need to pass a spending bill to avoid a government shutdown. Many expect Congress to pass a short-term bill ahead of the Saturday deadline.

Upbeat news on the coronavirus vaccine front helped limit the downside for the markets, with an FDA advisory panel giving a positive recommendation to Moderna's (MRNA) vaccine candidate.

Additionally, Johnson & Johnson (JNJ) said the first late-stage trial for its vaccine candidate is now fully enrolled, with the healthcare giant expecting interim data by late January.

On the U.S. economic front, a report released by the Conference Board showed its index of leading U.S. economic indicators increased by slightly more than expected in the month of November.

The Conference Board said its leading economic index rose by 0.6 percent in November after climbing by 0.8 percent in October. Economists had expected the index to increase by 0.5 percent.

"The US LEI continued rising in November, but its pace of improvement has been decelerating in recent months, suggesting a significant moderation in growth as the US economy heads into 2021," said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

Sector News

Gold stocks moved sharply lower over the course of the trading session, dragging the NYSE Arca Gold Bugs Index down by 2.8 percent.

The weakness among gold stocks came amid a modest decrease by the price of the precious metal, with gold for February delivery slipping $1.50 to $1,888.90 an ounce.

Significant weakness was also visible among oil service stocks, as reflected by the 2.4 percent drop by the Philadelphia Oil Service Index. Oil service stocks moved lower despite an increase by the price of crude oil.

Airline, commercial real estate and steel stocks also saw considerable strength, while networking stocks showed a substantial move to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index edged down by 0.2 percent, while China's Shanghai Composite Index slipped by 0.3 percent.

The major European markets also showed modest moves to the downside on the day. While the French CAC 40 Index fell by 0.4 percent, the U.K.'s FTSE 100 Index and the German DAX Index both dipped by 0.3 percent.

In the bond market, treasuries moved modestly lower after showing a lack of direction early in the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.8 basis points to 0.948 percent.

Looking Ahead

Developments in Washington are likely to drive trading next week, although traders are also likely to keep an eye on reports on new and existing home sales, personal income and spending, and durable goods orders.

However, trading activity may be somewhat subdued throughout the week ahead of the Christmas Day holiday next Friday.