By Caitlin Ostroff

U.S. stocks fell after President-elect Joe Biden unveiled a $1.9 trillion Covid-19 relief plan and the December retail-sales report came in weaker than expected, underscoring the coronavirus pandemic's continued effect on the economy.

The Dow Jones Industrial Average fell 134 points, or 0.4%, to 30865. The S&P 500 lost 0.3%, and the Nasdaq Composite added less than 0.1%.

Some of the losses are from investor fatigue, traders said. The major indexes surged to fresh record highs in the first week of January, but keeping up the momentum has been more difficult. The S&P 500 is on track to end the week lower.

The size of Mr. Biden's plan, even if Congress eventually shrinks it, took some by surprise.

"The magnitude obviously was surprising on the upside," said Wei Li, head of investment strategy for BlackRock's exchange-traded fund and index investments for Europe, Middle East and Africa. "With the Senate majority, [taxes] could be coming in the medium term and that is something the market has to assess as well."

Markets have for weeks cheered Democrats' plans to expand government spending and bolster the economic rebound, and Friday's retail-sales report underscored the need. U.S. consumers cut back on spending in December, the peak of the holiday season, as the country confronted a surge in coronavirus infections.

In corporate news, JPMorgan Chase rose 0.1% after the bank reported its highest-ever quarterly profit, though its full-year earnings fell 20%. Shares of Wells Fargo fell 4.8% after its revenue fell more than forecast, with lower interest rates weighing on net interest income. Citigroup slid 2.8%% as it reported fourth-quarter results.

Shares in Exxon Mobil slipped 3.8% after The Wall Street Journal reported that the Securities and Exchange Commission launched an investigation into the energy giant after an employee filed a whistleblower complaint last fall alleging that it overvalued one of its most important oil and gas properties.

In the broader market, investors are hoping that additional spending will help steer the U.S. economy through a winter that has seen high Covid-19 infection rates and worsening economic data. Figures released Thursday showed that the number of workers filing for jobless benefits posted its biggest weekly gain since the pandemic hit last March.

"When you see data this bad, you have to question if the prevailing expectation -- for cyclical recovery to come through -- if that would be shaken," Ms. Li said.

Investors will also get an indication of how confident American households are when the University of Michigan releases preliminary January figures for its consumer sentiment index at 10 a.m. ET. Consumer spending accounts for more than two-thirds of U.S. economic activity.

In bond markets, the yield on the 10-year Treasury note ticked lower to 1.103% from 1.128% Thursday. Yields fall when bond prices rise.

Despite days that see a pullback in markets, investors still expect that the additional fiscal stimulus will support a rally in stocks this year.

"Ultimately, you can't expect equities to go up every day in a straight line," said Mike Bell, global market strategist at J.P. Morgan Asset Management. "The numbers are really quite incredible and I think it is going to all add up to a boom in growth once the vaccines are rolled out."

Overseas, the pan-continental Stoxx Europe 600 fell 0.9%.

Trading in Asia ended on a mixed note. China's Shanghai Composite was largely flat, while Hong Kong's Hang Seng gained 0.3% and South Korea's Kospi slid 2%.

In Hong Kong, shares in Xiaomi, a consumer electronics company that focuses on mobile phones and household appliances, closed 10% lower after the U.S. Department of Defense added Xiaomi to a list of companies it says support China's military.

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Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

January 15, 2021 10:07 ET (15:07 GMT)

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