Stock Futures Slide on Tax Concerns -- 4th Update
By Caitlin Ostroff
U.S. stock futures edged lower Friday as some investors grew
concerned that President-elect Joe Biden's $1.9 trillion Covid-19
relief plan could lead to higher taxes.
Futures tied to the S&P 500 fell 0.4%, indicating the
benchmark index may decline for a second day. Contracts tied to the
Nasdaq-100 wavered between gains and losses, and those linked to
the Dow Jones Industrial Average slipped 0.5%.
The S&P 500 is on track to end the week lower, erasing some
of the gains made in early January when the gauge rallied to a
record high. Markets have for weeks cheered Democrats' plans to
expand government spending and bolster the economic rebound. But
the size of Mr. Biden's plans, laid out late Thursday, served to
check some of that optimism.
"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."
Ahead of the opening bell, JPMorgan Chase shares edged down less
than 1%. The bank on Friday reported its highest-ever quarterly
profit, though its full-year earnings fell 20%. Shares of Wells
Fargo fell 3.7% after its revenue fell more than forecast, with
lower interest rates weighing on net interest income. Citigroup
slid over 2% as it reported fourth-quarter results.
Shares in Exxon Mobil slipped 3% premarket 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.
Fresh data on Friday showed that Americans held back on spending
in December during the holiday season as the country confronted a
surge in coronavirus infections. Retail sales decreased a
seasonally adjusted 0.7% from a month earlier, marking the third
straight month of decline in the Commerce Department's measure of
spending at stores, vehicle dealerships, restaurants and online
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.
In bond markets, the yield on the 10-year Treasury note ticked
lower to 1.099%, from 1.128% Thursday. Yields fall when bond prices
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 0.8%.
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.
was used in creating this article.
Write to Caitlin Ostroff at email@example.com
(END) Dow Jones Newswires
January 15, 2021 08:58 ET (13:58 GMT)
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