NEW YORK (AP) – U.S. stocks are pulling back from their all-time highs on Monday, as Wall Street puts a quiet coda on one of its strongest months in decades.
The S&P 500 Index was 0.7% lower in the midday session after other reports showed how the worsening pandemic was slowing the economy in the near term. Despite the loss, the benchmark is still on track for a 10.5% surge this month, with investors hoping the economy will move closer to normal next year and strengthen over the long term. .
The Dow Jones Industrial Average was down 326 points, or 1.1%, at 29,583 at 11:12 a.m. EST, and the Nasdaq composite was 0.7% lower. Both are also near their all-time highs, and the Dow Jones hit the 30,000 level last week for the first time.
Several major forces are behind this month’s push, starting with removing some of the uncertainty that had hampered markets leading up to the U.S. election. Now Democrat Joe Biden is firmly in place as president-elect in the eyes of Wall Street, and investors have avoided their worst-case scenario of weeks or months of limbo with an unknown winner.
Investors have also found encouragement in the prospects that Washington will remain under divided political control. Republicans are on track to retain control of the Senate if they can win one of the next two ballots in Georgia. A divided government would mean low tax rates and other business-friendly policies could remain the status quo.
But the turbocharger for the growing market has been a huge dose of hope as pharmaceutical companies move closer to vaccine delivery in a world battered by the COVID-19 pandemic. Several recently reported encouraging data suggesting that their candidate vaccines are very effective.
“The vaccines offer the promise that major disruptions from the pandemic will disappear from the scene in 2021,” said Stephen Innes, chief global market strategist at Axi. “Economic life will gradually heal; the world will begin to move away from all the human suffering caused by the virus. “
Moderna said he would ask US and European regulators on Monday to authorize the emergency use of his COVID-19 vaccine. Its shares jumped 15.4%
Moderna is following Pfizer and its German partner BioNTech to begin vaccinations in the United States in December. British regulators are also evaluating the shot from Pfizer and another from AstraZeneca.
This helped the stock rally widen. As Wall Street’s recovery began this spring, it was Big Tech that almost single-handedly carried the market higher on expectations that working from home and other trends would mean bigger profits for them. But hopes of a more widespread economic recovery are now boosting stocks of companies whose profits are more closely tied to the strength of the economy.
Energy stocks in the S&P 500 are on track for a roughly 30% rise this month, for example. It’s a sharp turnaround from earlier this year, when oil prices fell as the pandemic kept planes, trucks and factories around the world idling or idling.
Financial stocks were also big winners on expectations that a stronger economy will create a stronger job market and higher interest rates. This could mean that more people will repay loans made at rates more profitable for banks. The smaller stocks in the Russell 2000 Index, meanwhile, are on track for a rise of around 19% this month.
However, many of those stocks were giving back some of their big gains on Monday following disheartening economic reports and as investors locked in some profits from their recent big gains. Apache lost 3%, American Airlines fell 4.2%, and the Russell 2000 fell 1.3%.
A report released Monday morning showed that growth in business activity in the Chicago area has slowed more than economists expected. A separate report said the pace of pending home sales was slower in October than expected. These are the latest data that suggest the resurgence of the pandemic is dragging on the economy, including a resumption in layoffs.
With the number of coronaviruses and hospitalizations on the rise in the United States, Europe and elsewhere, governments are reducing varying degrees of restrictions on businesses. Another concern for the markets is that the worsening pandemic will keep customers squatting in their homes, regardless of the type of home orders. Experts warn of a potentially brutal winter.
IHS Markit jumped 9.2% for Monday’s biggest gain in the S&P 500 after S&P Global announced it would buy the data provider in a deal valued at $ 44 billion, of which 4 , $ 8 billion in debt. S&P Global advanced 3.1%.
In European stock markets, the German DAX returned 0.4%, but other markets were weaker. France’s CAC 40 fell 0.3% and London’s FTSE 100 fell 0.5%.
In Asia, Japan’s Nikkei 225 fell 0.8%. After trading ended, Koichiro Miyahara, the head of the Tokyo Stock Exchange, resigned to take responsibility for a huge system glitch that shut down trading last month. The one-day outage on October 1 was the worst on record for the world’s third-largest exchange.
South Korea’s Kospi fell 1.6%, Hong Kong’s Hang Seng fell 2.1%, and Shanghai stocks fell 0.5%.
While the United States and Europe have remained hampered by high rates of infections, China’s economy is growing after successfully containing the pandemic. A report showed that growth in its manufacturing sector picked up in November.
The 10-year Treasury yield climbed to 0.84% from 0.83% on Friday night.
Yuri Kageyama, AP business writer, contributed.