UPDATE: Dow slips to start Tuesday trade as investors mull Congress passing COVID aid package

 




MW UPDATE: Dow slips to start Tuesday trade as investors mull Congress passing COVID aid package 

By Mark DeCambre 

U.S. stock indexes kicked off trade mostly slightly lower Tuesday, after a volatile session Monday, amid worries about a new strain of COVID-19 in the U.K., and fresh lockdowns in some countries, even though Washington lawmakers hurried through a $900 billion coronavirus aid package for households and businesses, culminating months of tense negotiations. 

On Monday (https://www.marketwatch.com/story/dow-set-to-sink-500-points-as-new-viral-strain-overshadows-fresh-coronavirus-aid-11608552060?mod=market-snapshot), markets finished mostly lower but not before a major comeback: 

Markets were under a little pressure to start Tuesday's trading action but sentiment was more upbeat than in the previous session that had been framed by uncertainty about a new strain of coronavirus rampant in the U.K. 

Investors were attempting to draw some optimism from the passage of a coronavirus aid package by Congress, though there were questions about how much of that deal has already been priced into the market's recent rally. 

President Trump is expected to sign another coronavirus aid package into law after the Senate and House voted late Monday to approve the $900 billion plan and a $1.4 trillion spending bill (https://www.marketwatch.com/story/party-leaders-begin-sales-pitches-on-coronavirus-aid-deal-ahead-of-monday-votes-11608517129)that will fund the government through September 2021. The Senate passed the fiscal spending bill 92-6 while the House approved it in a 359-53 vote late Monday. 

On Monday, investors were fretting over mutations of the coronavirus that causes COVID-19 in Europe. Medical experts, however, have said that vaccines should remain effective against the disease. President-elect Joe Biden received (https://www.marketwatch.com/story/biden-urges-americans-to-take-coronavirus-vaccine-as-he-gets-first-dose-11608584232?mod=article_inline) a vaccine during an on-camera event on Monday. 

In the U.S. there were 201,723 new COVID-19 cases reported in the U.S. on Monday, (https://www.marketwatch.com/story/coronavirus-tally-us-tops-18-million-covid-19-cases-as-daily-streak-of-new-case-declines-is-snapped-2020-12-22) up from 179,801 on Sunday, according to data provided by the New York Times (https://www.nytimes.com/interactive/2020/us/coronavirus-us-cases.html?name=styln-coronavirus%C2%AEion=TOP_BANNER&block=storyline_menu_recirc&action=click&pgtype=LegacyCollection&impression_id=84b04701-2346-11eb-b68c-575b6fb9b06b&variant=1_Show). 

In economic news, a final reading of U.S. gross domestic product in third quarter came in at a slightly stronger rate (https://www.marketwatch.com/story/historic-increase-in-u-s-gdp-in-third-quarter-revised-to-33-4-annualized-rate-11608644494?mod=mw_latestnews) than had been estimated by economists surveyed by MarketWatch, at an annualized growth rate of 33.4% compared with a previous reading of 33.1%, as the economy claws back from pandemic lows. 

"The third read on GDP this morning isn't too surprising, but it is encouraging," wrote Mike Loewengart, managing director and investment strategist at E-Trade Financial, in a Tuesday note. 

"While these numbers aren't reflective of the here and now, they show the resiliency of the economy. But we know things have changed pretty drastically in Q4, so all eyes will be on where GDP shakes out in the new year," the strategist said. 

"With stimulus on the horizon, we could see a boost in consumer spending that could fuel GDP growth, but it remains to be seen if pandemic relief is too little too late," he said. 

After two quarters of distorted GDP data though, the economy is seen returning to a somewhat more normal growth rate in the fourth quarter of 2020. Economists are expecting growth at a 3.5% annualized rate in the fourth quarter. 

Looking ahead, a report on consumer confidence from the U.S. Conference Board and a reading of existing home sales are due at 10 a.m. ET, along with a report on manufacturing activity in the Federal Reserve's Richmond district. 

-Mark DeCambre; 415-439-6400; AskNewswires@dowjones.com 

(END) Dow Jones Newswires 

December 22, 2020 09:51 ET (14:51 GMT) 

Copyright (c) 2020 Dow Jones & Company, Inc.

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