By Geoffrey Smith
Investing.com – US equity markets opened on Wednesday as reports suggesting a stimulus deal is near on Capitol Hill were offset by the weakest retail sales report in six months. This is the most concrete evidence that the recent wave of the pandemic is slowing the economy.
The news overshadowed the main event of the day – the policy decisions and the Federal Reserve press conference.
At 9:35 a.m. ET (1435 GMT) the reading was essentially flat, rising just 6 points to 30,206 points while the and that also gained less than 0.1%.
All three indexes had posted strong gains on Tuesday as there were signs that, after months of fruitless haggling, Congress was on the verge of finalizing a stimulus package.
Earlier, the Commerce Department announced that retail sales were down 1.1% in November, the first drop in six months and worse than expected for a 0.3% drop. The sales figures in October were also revised downwards. Against the backdrop of record coronavirus infection rates and tightening lockdown measures, the numbers seem to be clear evidence that the constant stream of layoffs due to the pandemic is flowing into household consumption.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the numbers showed an outright decline in gross domestic product is becoming increasingly likely in the fourth quarter, although he added the caveat that “the weakness in sales is not due to a lack of resources; households are not overall limited by lack of money. “
As such, he added, “Softer spending only adds to the world’s pent-up demand for Covid.”
The data was enough to encourage profit-taking on recent trades, with Tesla (NASDAQ 🙂 shares falling 1.4% and Moderna (NASDAQ 🙂 stock falls 5.8%.
They also overshadowed the clearest signs that Congress will agree on a bailout package for the economy before hiatus at the end of the week.
“We agreed that we would not leave town until we passed a law,” Senate Majority Leader Mitch McConnell was quoted as saying by Newswires on Wednesday morning. “We have made great strides to work out a targeted aid package … that can pass both chambers of bipartisan majorities.”
Other stocks that took big strides early on included China-based streaming company iQIYI (NASDAQ :), which fell 15% after a reduced secondary offering of stocks and convertibles valued at around $ 1.5 billion, which among other things used to pay for new streaming content.
Penumbra (NYSE 🙂 stock also fell 7.8% as excitement over the medical device manufacturer’s catheters continued.
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