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U.S. Stocks Mostly Lower After Failed Recovery Attempt

wallstreet oct25 22jan21 lt

Stocks staged a recovery attempt after an initial move to the downside but are mostly lower in morning trading on Friday. The weakness on the day comes on the heels of the strength seen over the past few sessions, with the Nasdaq pulling back off a record closing high.

Currently, the major averages remain in the red. The Dow is down 246.17 points or 0.8 percent at 30,929.84, the Nasdaq is down 36.00 points or 0.3 percent at 13,494.91 and the S&P 500 is down 19.03 points or 0.5 percent at 3,834.04.

Profit taking has contributed to the weakness on Wall Street, as some traders look to cash in on the recent run to new record highs.

Uncertainty about President Joe Biden's proposed $1.9 trillion coronavirus relief package has also generated some selling pressure after Republican Senators Mitt Romney and Lisa Murkowski both expressed skepticism about more stimulus.

Romney and Murkowski both pointed to the recently approved $900 billion stimulus and raised questions about whether more relief is needed.

Democrats could attempt to pass a new stimulus bill without Republican support by the so-called reconciliation process, which only requires a majority.

However, Democratic Senator Joe Manchin has also expressed concerns about the cost of increasing the size of direct payments to individuals to $2,000 from $600.

A steep drop by shares of IBM Corp. (IBM) is also weighing on Wall Street after the tech giant reported better than expected fourth quarter earnings but on revenues that missed analyst estimates.

Semiconductor giant Intel (INTC) is also seeing notable weakness after jumping late in the previous session after reporting better than expected fourth quarter results just before the close of trading.

Intel released its quarterly results ahead of schedule following reports that a graphic in its earnings statement had been the object of unauthorized access.

In U.S. economic news, the National Association of Realtors released a report showing an unexpected rebound in existing home sales in the month of December.

NAR said existing home sales climbed by 0.7 percent to an annual rate of 6.76 million in December after tumbling by 2.2 percent to a revised rate of 6.71 million in November.

The rebound surprised economists, who had expected existing home sales to slump by 2.1 percent to a rate of 6.55 million from the 6.69 million originally reported for the previous month.

With the unexpected monthly increase, existing home sales in December were up by 22.2 percent compared to the same month a year ago.

"Home sales rose in December, and for 2020 as a whole, we saw sales perform at their highest levels since 2006, despite the pandemic," said Lawrence Yun, NAR's chief economist.

He added, "What's even better is that this momentum is likely to carry into the new year, with more buyers expected to enter the market."

Computer hardware stocks are seeing considerable weakness in morning trading, with the NYSE Arca Computer Hardware Index tumbling by 2.3 percent after ending the previous session at a record closing high.

Significant weakness is also visible among steel stocks, as reflected by the 2.1 percent slump by the NYSE Arca Steel Index.

Oil service, natural gas and gold stocks have also shown notable moves to the downside, moving lower along with the prices of their associated commodities.

While brokerage and airline are also seeing some weakness on the day, software stocks are extending a recent upward trend.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index fell by 0.3 percent ,while Hong Kong's Hang Seng Index tumbled by 1.6 percent.

The major European markets have also moved to the downside on the day. While the French CAC 40 Index has slid by 0.6 percent, the U.K.'s FTSE 100 Index is down by 0.4 percent and the German DAX Index is down by 0.2 percent.

In the bond market, treasuries have pulled back off their best levels but continue to see modest strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.3 basis points at 1.096 percent.

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