Stocks Open Lower After Joe Biden Plan Raises Tax Concerns
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
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.
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
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.
was used in creating this article.
Write to Caitlin Ostroff at email@example.com
(END) Dow Jones Newswires
January 15, 2021 10:07 ET (15:07 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.