By Joy Wiltermuth and William Watts
The Dow on Monday pulled back from an intraday record to close lower, as investors weighed the U.S. rollout of a COVID-19 vaccine against tightening restrictions implemented in New York City and parts of Europe ahead of Christmas.
Stocks posted a mixed finish Friday , leaving benchmarks with modest losses for the week. The Dow saw a 0.6% weekly fall, while the S&P 500 fell 1% and the Nasdaq declined 0.7%. The small-cap Russell 2000, however, saw a sixth straight weekly gain, rising 1%.
“The market is swinging back and forth because of the potential for further lockdowns,” Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, told MarketWatch.
But even if New York City follows much of California into a “full lockdown,” as Mayor Bill de Blasio warned was possible on Monday, Schutte thinks investors instead should focus on “stimulus and the vaccine,” which he sees as likely to broaden the economy “for the first time since 2018,” when the U.S. and China trade war intensified with tariffs.
“It’s that tug of war,” he said.
Pfizer Inc. /zigman2/quotes/202877789/composite PFE -0.23% over the weekend began shipping the vaccine it created with Germany’s BioNTech SE /zigman2/quotes/214419716/composite BNTX +5.63% around the country, after the Food and Drug Administration late Friday granted emergency authorization for its use.
Wall Street also was hopeful about the prospects of a new round of spending by the U.S. government in a crunch week , after leaders from both parties over the weekend signaled they would be open to setting aside the most contentious topics in long-running talks.
A bipartisan group of Senate and House lawmakers, which has pushed for a compromise $908 billion plan, was reportedly set to release a two-part plan yet on Monday: $160 billion of state and local aid and liability protections into a package, with another $748 billion aid plan that would provide $300 a week in additional state unemployment benefits for four months, $300 billion in aid to small businesses and $35 billion for health-care providers, according to several news reports .
Jean Boivin, head of BlackRock’s Investment Institute, called the start of vaccine distribution a “game-changer,” in a Monday note, even as U.S. jobs data has disappointed in recent weeks and several European counties in recent days announced stricter lockdowns to curb infections ahead of Christmas.
“We now know we are building a bridge to somewhere, providing clarity for policy makers, households and companies about getting to a post-COVID stage,” Boivin’s team wrote.
The U.S. counted 184,248 new cases on Sunday, and at least 1,357 people died, according to a New York Times tracker . The U.S. has averaged 210,112 cases a day over the past week, up 30% from the average two weeks earlier. A record 109,331 COVID-19 patients were in U.S. hospitals on Sunday, according to the COVID Tracking Project , topping the record of 108,487 set a day earlier.
The economic calendar was largely empty Monday. The main event this week will likely be the Federal Reserve’s final policy meeting of 2020 on Tuesday and Wednesday.
Check out : 4 things to watch when Fed meets Wednesday
The Fed isn’t expected to make any policy changes, but may continue to underline the need for politicians to provide fiscal support to the pandemic-hit economy, analysts said.
“Financial conditions remain conducive to economic activity, so the Fed is biding its time. At their meeting this week, the Fed is likely to provide additional qualitative guidance on its asset purchase program, tying it to future economic outcomes, but stop short of stepping up the amount of asset purchases,” said Neil Dutta, head of economics at Renaissance Macro Research, in a note.
Outside the U.S., U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed on Sunday to scrap a deadline and go “the extra mile” to reach a post-Brexit trade deal.