Spiking COVID-19 infections and the challenges of containing pandemic overshadow positive vaccine news this week.
A mixed open for US stocks as investor sentiment waffles between hopeful vaccine news and spiking infections [File: Chip East/Reuters]
Wall Street’s main stock indexes were mixed at the open of trading on Thursday as surging COVID-19 infections in the United States and Europe eclipse promising vaccine news that sparked a rally earlier in the week.
The Dow Jones Industrial Average fell more than 180 points or 0.61 percent to 29,217.51 in the opening minutes of trading on Wall Street.
The broader S&P 500 was down 0.35 percent while the Nasdaq Composite Index was hovering near unchanged.
Wall Street’s three main indexes have climbed between 8 percent and 11 percent in the past two weeks on the prospect that a Republican-controlled Senate would temper President-Elect Joe Biden’s plans to increase regulation and taxes on the financial industry.
But a powerful rally took hold on Monday after Pfizer said a late-stage clinical trial showed the COVID-19 vaccine candidate it is developing with Germany’s BioNTech proved 90 percent effective.
That ignited hopes that the economy could be poised to ‘normalize’ sometime next year.
Investors rotated out of tech and other stocks that have benefited from pandemic shifts in work and consumer habits and into beaten-up sectors like travel, leisure and financials.
But angst over the pandemic challenges facing the US and the other parts of the world has tempered investor optimism.
New coronavirus cases in the US continue to surge above 100,000 for the eighth straight day – topping 144,000 as of Thursday, according to Johns Hopkins University.
New York on Wednesday followed the lead of California and parts of the Midwest by introducing new business-sapping restrictions to contain spiraling infection rates.
That promises to heap even more pressure on the US labour market, where the recovery continues to shift into low gear.
Applications for unemployment benefits with states fell to 709,000 last week, the US Bureau of Labor Statistics said on Thursday.
While that is a seven-month low – layoffs remain widespread and are still higher now than they were during the peak of the 2007 to 2009 Great Recession.
People stand in line to be tested for the coronavirus in Staten Island, New York, United States [File: Brendan McDermid/Reuters]Compounding the pain for the nation’s jobless – Washington is still deadlocked over another round of virus relief aid for the unemployed and struggling businesses.
The stalled stimulus package and rising infections pose key risks to the economic recovery.
“Despite the prospects for an effective vaccine on the horizon, the resurgence in Covid-19 infections and looming expiration of fiscal support represent significant downside risks to the economy in the near term,” said Oxford Economics Lead US economist in a note to clients on Wednesday.