Lingering concerns over a new variant of COVID-19 in the United Kingdom weighed on a gauge of global equities on Tuesday.
However, a 4.2% jump in technology stocks led Canada’s main stock index higher.
The S&P/TSX composite index unofficially closed up 51.57 points, or 0.29%, at 17.552.46.
Lightspeed POS Inc. gained 11.5%, while Shopify Inc. and Docebo Inc. rose 7.3% and 7.1%, respectively.
The S&P 500 lost ground at the end of a whipsaw session on Tuesday as concerns over a new variant of the coronavirus and disappointing economic data stole the thunder from Washington’s passage of a long-awaited pandemic relief bill.
The Dow also closed lower, while Apple Inc helped fuel the tech-heavy Nasdaq’s advance.
“Today the market is catching its breath,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. “It’s digesting the two big pieces of news we’ve gotten in the last 24 hours, the stimulus and the new COVID strain.”
Still, this is typically a seasonally bullish time of year, Detrick added, saying “the market doesn’t care about the past or present. The market only cares about the future.”
Apple was an outlier amid a broad sell-off, its stock jumping on news of the company’s plans to roll out an electric passenger vehicle by 2024.
Overnight, Congress passed a pandemic relief package worth $892 billion after months of a partisan tug-of-war, aimed at propping up an economic recovery faltering under the weight of restrictions aimed at containing a coronavirus resurgence.
That resurgence continues to swell, infecting 214,000 Americans every day, prompting mandatory shutdowns and pushing hospitals to capacity.
A fast-spreading new variant of the virus discovered in Britain has brought movement in and out of the UK to a halt and sent vaccine makers Pfizer Inc and Moderna Inc scrambling to ensure their drugs were effective against it.
Fears of the coronavirus and optimism about an eventual economic recovery made for extreme volatility on Wall Street in 2020, with the S&P 500 logging daily gains or losses of 2% or more over 40 times in the year so far, the most in over a decade.
“This will be the first year in history when stocks were off 30% for the year at one point and finished in the green,” Detrick said. “It’s truly an amazing round-trip and we’ve never seen anything like it.”
On the economic front, consumer confidence unexpectedly dropped while sales of pre-owned U.S. homes posted their first decline in six months.
Unofficially, the Dow Jones Industrial Average fell 202.12 points, or 0.67%, to 30,014.33, the S&P 500 lost 7.67 points, or 0.21%, to 3,687.25 and the Nasdaq Composite added 65.40 points, or 0.51%, to 12,807.92.
Tesla Inc closed lower, extending its slide on its second day as a S&P 500 constituent.
Peloton Interactive Inc jumped as brokers hiked their price targets on the stock on the heels of the company’s announcement that it would buy peer Precor in a deal worth $420 million.
Some investors said that the fiscal stimulus had already been priced into U.S. equities, while other observers considered the package underwhelming.
“There were probably hopes that there would be something bigger,” said Michael Purves, chief executive of Tallbacken Capital Advisors. “There’s a good chance the economy will need another package.”
Weak U.S. economic data, including existing home sales and an index of consumer confidence, also stymied stocks while lending a boost to the U.S. dollar.
The sluggishness in U.S. stocks offset a rebound in European stocks, which had been pummeled on Monday as fresh coronavirus concerns mounted. Progress toward a trade deal between the European Union and the UK helped lift the pan-European STOXX index, which ended 1.18% higher. The STOXX logged its biggest one-day percentage gain in more than five weeks.
As a result of the performance in U.S. stocks, MSCI’s index of global stocks slipped. It was last down 0.06%.
U.S. Treasury yields also fell as investors weighed the likelihood of increased lockdowns in response to the new COVID-19 variant. Benchmark 10-year Treasury notes last rose 7/32 in price to yield 0.9197%, from 0.941% late on Monday.
Among currencies, the euro and the pound dropped, in part on expectations that such restrictions could weaken Europe’s economic outlook. On Monday, countries across the world shut their borders to Britain because of fears over the new variant.
The euro was last down 0.66% to $1.2161, while the pound was last trading at $1.3352, down 0.88%.
Analysts remained pessimistic on the pound’s prospects, even after reports of progress in Brexit trade talks.
MUFG said in a note to clients it expected London and Brussels would strike a last-minute deal, but added: “Even if a trade deal is reached, upside potential for the pound will now be dampened by recent negative COVID developments in the UK.”
The risk-off sentiment in currency markets propped up the dollar index, which rose 0.591%. Even so, the index was still on course for a third consecutive quarterly loss.
Oil markets also reflected sustained worries over the new coronavirus variant. Both Brent and U.S. crude fell more than 1%.
Still, some investors maintained hope for a strong economic recovery in 2021, given expectations that vaccines would be effective against the new variant of COVID-19.
The new mutation “is a bump in the road, but that road is still leading to a much stronger recovery in the second half of next year,” said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.
Reuters
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