Late-Day Pullback Leads To Mixed Close On Wall Street

After seeing strength for much of the session, stocks came under pressure going into the close of trading on Thursday. The major averages pulled back well off their highs, with the S&P 500 sliding into negative territory.

The S&P 500 edged down 2.29 points 0.1 percent to 3,666.72 after reaching a record intraday high, while the Dow rose 85.73 points or 0.3 percent to 29,969.52 and the Nasdaq edged up 27.82 points or 0.2 percent to a new record closing high of 12,377.18.

The late-day pullback on Wall Street came after a report from the Wall Street Journal said Pfizer (PFE) expects to ship half of the coronavirus vaccines it originally planned for this year because of supply-chain problems.

A company spokeswoman told the Journal that scaling up the raw material supply chain took longer than expected and noted the outcome of the clinical trial of the vaccine candidate was somewhat later than initially projected.

The strength seen earlier in the day partly reflected a positive reaction to a report from the Labor Department showing a much bigger than expected decrease in first-time claims for U.S. unemployment benefits in the week ended November 28th.

The Labor Department said initial jobless claims dropped to 712,000, a decrease of 75,000 from the previous week’s revised level of 787,000.

Economists had expected jobless claims to edge down to 775,000 from the 778,000 originally reported for the previous month.

The weekly jobless claims data generated some positive sentiment ahead of the release of the Labor Department’s more closely watched monthly jobs report on Friday.

Economists expect employment to increase by 481,000 jobs in November after jumping by 638,000 jobs in October. The unemployment rate is expected to edge down to 6.8 percent from 6.9 percent.

Traders also kept an eye on developments in Washington, as lawmakers have resumed negotiations over a new fiscal stimulus bill.

Senate Majority Leader Mitch McConnell, R-Ken., said a “compromise is within reach” but continues to favor his narrower approach to stimulus.

House Speaker Nancy Pelosi’s, D-Calif., deputy chief staff Drew Hammill noted the two leaders spoke by phone this afternoon and have a “shared commitment to completing an omnibus and COVID relief as soon as possible.”

Both Democrats and Republicans have offered new stimulus proposals, although it remains to be seen if lawmakers will finally reach an agreement after months of stagnation.

Boeing (BA) helped to lead the Dow higher, with the aerospace giant jumping by 6 percent on news Europe’s largest airline Ryanair is placing a firm order for 75 additional 737 MAX airplanes

Meanwhile, traders shrugged off a report from the Institute for Supply Management showing the slight pullback in the pace of growth in U.S. service sector activity continued in the month of November.

The ISM said its services PMI edged down to 55.9 in November after dipping to 56.6 in October, although a reading above 50 still indicates growth. Economists had expected the index to slip to 56.0.

Sector News

Despite the late-day pullback by the broader markets, airline stocks held on to substantial gains. The NYSE Arca Airline Index soared by 4.5 percent to its best closing level in over nine months.

Significant strength also remained visible among housing stocks, as reflected by the 2.8 percent jump by the Philadelphia Housing Sector Index. The index rebounded after closing lower for four straight sessions.

Oil stocks also turned in a strong performance on the day, resulting in a 1.1 percent advance by the NYSE Arca Oil Index. The strength in the sector came as the price of crude for January delivery rose $0.36 to $45.64 a barrel.

Most of the other major sectors ended the day showing more modest moves, contributing to the lackluster close by the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index closed just above the unchanged line, while Hong Kong’s Hang Seng Index climbed by 0.7 percent.

Meanwhile, the major European markets turned in another mixed performance on the day. While the U.K.’s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index edged down by 0.2 percent and the German DAX Index slid by 0.5 percent.

In the bond market, treasuries regained ground as traders looked ahead to the monthly jobs report. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 0.920 percent.

Looking Ahead

Trading on Friday is likely to be driven by reaction to the monthly jobs report, which will overshadow separate reports on the U.S. trade deficit and factory orders.

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