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Markets

Wall Street closes lower as surging COVID-19 cases offset vaccine hopes

  • Pfizer to seek emergency green light from FDA.
  • Chip-makers, stay-at-home stocks outperform.
  • Mnuchin to let Fed lending programs expire on Dec. 31.
21 Nov 2020

NEW YORK: US stocks closed lower on Friday as investors wrestled with fiscal stimulus developments, concerns over a lengthy rollout of vaccines, and a growing number of state-level shutdowns to combat the spiraling COVID-19 pandemic.

Stay-at-home plays such as Zoom Communications Inc and Netflix Inc, which have outperformed throughout the health crisis, helped curb the Nasdaq's loss.

Throughout the week, the ebb and flow of vaccine news and spiking infections had investors oscillating between economically-sensitive cyclical stocks and pandemic-resistant market leaders.

The S&P 500 and the Dow posted marginal losses for the week, while the tech-laden Nasdaq settled a bit higher from last Friday's close.

"Markets are still stuck in a push-and-pull between the dramatic rise of new COVID cases versus apparent progress on vaccines," said David Carter, chief investment officer at Lenox Wealth Advisors in New York. "This is likely to continue until we have an approved and distributed vaccine."

US Treasury Secretary Steven Mnuchin announced late Thursday that he would allow key pandemic-relief lending programs at the Federal Reserve to expire at the end of the year, saying the $455 billion allocated last spring under the CARES act should be returned to Congress to be reallocated as grants for small companies.

The decision to pull the plug on lending programs deemed essential by the central bank comes at a time of spiraling new coronavirus infections and a fresh wave of layoffs, and was called "disappointing" by Chicago Federal Reserve president Charles Evans.

"This dust-up between the Fed and Treasury could have serious implications, as markets want to see the two institutions working well together," Carter added. "The timing of this dust-up is unfortunate, as the risk of COVID is still very much with us."

Record infection numbers have caused COVID hospitalizations to soar by 50% and have prompted a new round of school and businesses closures, curfews and social distancing restrictions, hobbling the economic recovery from the deepest recession since the Great Depression.

In the latest development in the race to develop a vaccine, Pfizer Inc has applied to the US Food and Drug Administration for emergency use authorization of its COVID-19 vaccine, the first application of its kind in the battle against the disease.

Unofficially, the Dow Jones Industrial Average fell 219.95 points, or 0.75%, to 29,263.28, the S&P 500 lost 24.22 points, or 0.68%, to 3,557.65 and the Nasdaq Composite dropped 49.74 points, or 0.42%, to 11,854.97.

Stay-at-home beneficiary Zoom Video Communications Inc provided the biggest lift to the Nasdaq.

Gilead Sciences Inc lost ground after a World Health Organization panel advised against the use of the company's COVID-19 treatment remdesivir, citing lack of evidence the drug improves survival or reduces the need for ventilation.