By Joy Wiltermuth and Sunny Oh
The Nasdaq Composite notched a fresh record Monday, but equity markets closed mostly lower, as worries about COVID-19’s spread escalated and unease about global political developments kept risk taking on Wall Street in check.
On Friday, the stock market closed out the week higher and all three major benchmarks, as well as the small-cap Russell 2000 /zigman2/quotes/210598147/delayed RUT -3.06% , finished at all-time highs:
As investors waited on Washington lawmakers to produce a long-overdue, pandemic-aid package, the Dow and S&P 500 hit pause on booking fresh records. Additional spending is seen as arguably the biggest potential catalyst for markets as the economic recovery faces a challenge from the resurgence of COVID-19 cases.
Some economists and strategists are urging Capitol Hill to pass a new coronavirus aid package as soon as possible to help Americans weather the pandemic until a vaccine is widely distributed, particularly as concerns grow about the pace of job growth slowing substantially.
“The bigger picture is twofold. No new stimulus has been announced and on top of that the government is also set to run out of money,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, adding that the latest pandemic aid proposal has been tied to a larger year-end spending bill to avert a government shutdown over the coming weekend.
“The market also expects that whatever stimulus they do announce isn’t going to be enough,” Pavlik told MarketWatch.
Top congressional Democrats have endorsed a $908 billion bipartisan package that calls for $300 a week in enhanced unemployment benefits, $288 billion in assistance for U.S. businesses and $160 billion for state and local. Pelosi said Friday that talks on a COVID-19 relief package have “momentum.”
Sen. Bill Cassidy, R-La., on Monday told CNBC that he remained optimistic President Donald Trump and Senate Majority Leader Mitch McConnell, R-Ky., will back the proposal, but said sticking points remain. To that end, Congress aims to extend government funding for an additional week while details of a relief package can be hammered out.
Further aid delays in Washington come as November’s U.S. employment released on Friday showed that 245,000 jobs were added to the U.S. economy , far less than the 432,000 estimated, marking the weakest monthly rise since May and suggesting that it may take several years to recover the millions of jobs lost due to the pandemic.
Investors also monitored discussions between the European Union and U.K. officials that appear perilously close to leading to no trade agreement. Over the weekend, U.K. Prime Minister Boris Johnson held talks with European Commission President Ursula von der Leyen, as negotiators try to reach a so-called Brexit deal, according to reports.
The British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2427% came under pressure on Monday as investors feared that a no-trade deal will come to fruition, potentially adding to market turmoil amid the pandemic.
“We are already starting to see the effects of rising COVID-19 infections on various economies,” wrote Kristina Hooper, Invesco chief global market strategist, in a Monday note, adding that “things are likely to get worse before they get better in the Western world, especially in the U.S.,” as a surge in hospitalizations weighs on improvements made in treating the virus nine months into the pandemic.
“And that means that government officials who publicly stated their opposition to lockdowns are being forced to impose them, with more metro areas in the U.S. announcing lockdowns over the past several days,” she added.
The rise in infections prompted new stay-at-home orders on Sunday night for Southern California, much of the San Francisco Bay Area and other areas through Christmas, threatening to bring the once-bustling economy to its knees .
Elsewhere in the world, Reuters reported the Trump administration was preparing economic sanctions on a dozen more Chinese officials, in response to Beijing’s crackdown on dissent in Hong Kong.
On top of that, index compiler FTSE Russell said it would drop eight Chinese stocks from major indexes that it says supports China’s military .
Back on the public-health front, Dr. Deborah Birx, the White House’s coronavirus response coordinator, warned on Sunday that the surge in new cases “is the worst event that this country will face,” as hospital systems are overrun.
Thus far, the global tally for confirmed cases of COVID-19 rose above 67 million on Monday, according to data aggregated by Johns Hopkins University , while the death toll rose above 1.5 million. The U.S. has the highest case tally in the world at 14.8 million and the highest death toll at 282,324, more than a fifth of the global total.
The pan-European Stoxx 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.41% closed lower by 0.3%, while the U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.35% rose less than 0.1%, as weakness in the pound made multinational companies based in the U.K., offering goods services outside the country, more attractive abroad.
In Asian markets, China’s Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.33% finished 0.8% lower, while Hong Kong’s Hang Seng /zigman2/quotes/210598030/delayed HK:HSI +0.06% booked a 1.2% drop. Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK -2.80% ended 0.8% lower.
The yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.48% fell 3.9 basis points to 0.928%. Yields and prices move in opposite directions.
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.14% , a gauge of the greenback’s strength against its major rivals, was up 0.2%.
Crude-oil futures /zigman2/quotes/211629951/delayed CL.1 +1.17% fell 1.1% to settle at $45.76 a barrel on the New York Mercantile Exchange Gold futures rose 1.4% to close at $1,866 an ounce.
<STRONG>Mark DeCambre contributed reporting</STRONG>