U.S. Stocks Close Mixed Once Again As Early Rally Fades

Stocks showed a strong move to the upside in early trading on Monday but gave back ground over the course of the session. The major averages pulled back well off their highs of the session, with the Dow and the S&P 500 sliding into negative territory.

The major averages eventually closed mixed for the third consecutive session. While the Nasdaq rose 62.17 points or 0.5 percent to 12,440.04, the Dow slid 184.82 points or 0.6 percent to 29,861.55 and the S&P 500 fell 15.97 points or 0.4 percent to 3,647.49.

The pullback by stocks came as amid concerns about the impact of new lockdown measures as the coronavirus death toll in the U.S. reached 300,000.

New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio have both warned that the city could be headed for another “full shutdown” unless the second wave of coronavirus infections is contained.

“What is increasingly clear is that all forms of restrictions have to be on the table at this point,” de Blasio told reporters. “At the current rate we’re going, you have to be ready now for a full shutdown — a pause like we had back at the end of the spring.”

The warnings about a new round of shutdowns come despite the approval of the coronavirus vaccine developed by Pfizer (PFE) and BioNTech (BNTX).

The CDC signed off on the vaccine following the Emergency Use Authorization issued by the FDA. Pfizer has commenced the first shipments of the vaccine to distribution centers across the country.

The vaccine news contributed to the initial strength on Wall Street along with continued optimism about a new fiscal stimulus bill, with a report from Reuters detailing efforts to pass a previously unveiled $908 billion bipartisan relief plan.

A person briefed on the matter told Reuters the package will be split into two proposals that could be voted on separately in order to win approval.

Reuters said one bill would be a $748 billion measure including money for small businesses, the jobless and COVID-19 vaccine distribution, while the other would include more controversial measures such as liability protections for business and aid for state and local governments.

Sector News

Energy stocks moved sharply lower over the course of the session despite an increase by the price of crude oil. Crude for January delivery climbed $0.42 to $46.99 a barrel.

Reflecting the weakness in the energy sector, the NYSE Arca Oil Index plunged by 3.6 percent, while the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index tumbled by 2.9 percent and 2.8 percent, respectively.

Substantial weakness also emerged among gold stocks, as reflected by the 2.4 percent slump by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks came amid a decrease by the price of the precious metal, with gold for February delivery sliding $11.50 to $1,832.10 an ounce.

Pharmaceutical, transportation and banking stocks also came under pressure as the day progressed, contributing to the pullback by the broader markets.

On the other hand, considerable strength remained visible among biotechnology stocks, resulting in a 3.4 percent spike by the NYSE Arca Biotechnology Index. The index ended the session at a four-month closing high.

Alexion Pharmaceuticals (ALXN) led the sector higher after agreeing to be acquired by AstraZeneca (AZN) in a cash and stock deal valued at $39 billion or $175 per share.

Semiconductor stocks also held on to notable gains, with the Philadelphia Semiconductor Index ending the day up by 1.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index rose by 0.3 percent, while Hong Kong’s Hang Seng Index fell by 0.4 percent.

The major European markets also finished the day mixed. While the U.K.’s FTSE 100 Index dipped by 0.2 percent, the French CAC 40 Index climbed by 0.4 percent and the German DAX Index advanced by 0.8 percent.

In the bond market, treasuries bounced back near the unchanged line after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.892 percent after reaching a high of 0.936 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to a report on industrial production, although news on the coronavirus and stimulus fronts is likely to remain in the spotlight.

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