Wall Street was mixed on Wednesday as surging layoffs in the wake of a new round of shutdowns to contain spiraling COVID-19 infections dampened investor risk appetite. The S&P 500 and the Dow Jones Industrial Average retreated from record closing highs, pulled lower by cyclicals and small caps that drove the rally earlier in the week. Pandemic-resilient tech and tech-adjacent market leaders helped keep the Nasdaq afloat.
"Days like we're seeing today on the heels of strong growth is a response to the ebb and flow of the market," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. "It's natural to see some profit-taking as people look at valuations and take money off the table."
A wide range of data released in advance of Thursday's Thanksgiving holiday was dominated by a second consecutive week of unexpected jobless claims increases, suggesting that new restrictions to combat spiking coronavirus cases could hobble the struggling labor market's recovery. The market appeared to be replaying the previous two weeks, which began with rallies driven by promising vaccine news but pivoted back to stay-at-home plays on near-term pandemic realities and lack of new fiscal stimulus.
Still, the vaccine developments and removal of uncertainties surrounding the U.S. presidential election have driven Wall Street indexes to record closing highs, and put the S&P 500 on course for its best November ever.
"The move this month speaks to not only clarity regarding the election uncertainties but also the potential for new stimulus that is out there, an extremely accommodative Fed and tremendous amount of pent-up demand from the consumer's standpoint," Keator added. Market participants believe U.S. stocks have more room to climb. A recent Reuters poll showed analysts believe the S&P 500 will gain 9% between now and the end of 2021. The index has surged about 66% since the coronavirus-led crash in March and is up about 12% so far this year.
The Dow Jones Industrial Average fell 197.14 points, or 0.66%, to 29,849.1, the S&P 500 lost 12.24 points, or 0.34%, to 3,623.17 and the Nasdaq Composite added 29.74 points, or 0.25%, to 12,067.06. Of the 11 major sectors of the S&P 500, energy suffered the largest percentage loss.
The economically sensitive banking sector lost ground, with the S&P 500 Banks index shedding 1.1%.Tesla Inc, which surpassed $500 billion in market capitalization on Tuesday, extended its gain by 2.4% even after the electric-car maker recalled about 9,500 vehicles.
The company also plans to start manufacturing electric vehicle chargers in China starting next year, according to documents it submitted to Shanghai authorities. Declining issues outnumbered advancers on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored decliners. The S&P 500 posted 14 new 52-week highs and no new lows; the Nasdaq Composite recorded 106 new highs and five new lows.
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