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At 10: 3am ET, the Dow Jones 30 Industrial Average on the New York Stock Exchange (NYSE) was trading at 30,874.22, 117.30 points (0.38%) lower than on the battlefield.
The Standard & Poor’s (S&P) 500 Index fell 14.30 points (0.38%) from the battlefield to 3,781.24, while the Nasdaq index of technology stocks fell 24.69 points (0.19%) to 13,087.94.
The market is watching Biden’s stimulus measures, fourth-quarter earnings from major banks, and economic indicators, including retail sales.
Biden-elect proposed a $ 1.9 trillion stimulus plan the day before. It included additional cash payments to Americans, extended unemployment benefits, and extended periods.
Biden-elect also announced plans to announce another fiscal stimulus plan in February that focuses on investment in infrastructure and responding to climate change.
A large-scale stimulus plan has been announced, but the stock market reaction is grim.
It is assessed that the stimulus expectations have already been significantly reflected in the price. The pattern of transactions called “buy on rumors and sell on the news” is emerging.
In a situation where the confrontation between Democrats and Republicans has been exacerbated by the impeachment bill against President Donald Trump, the question arises whether the stimulus plan can be agreed without problems in Congress.
Some say the larger-than-expected stimulus plan has fueled concerns about possible tax increases. Various taxes, including corporation tax, are expected to inevitably be promoted for financing. The Democratic Party had raised the need for tax increases even before the presidential election.
Weak consumer indicators in the US also affected investor sentiment.
The Commerce Ministry announced that December retail sales fell 0.7% from the previous month. It was much less than the 0.1% drop in the market forecast compiled by The Wall Street Journal.
The effect of the reproliferation of the new coronavirus infection (Corona 19) was found to be visible, such as a sharp decline in restaurant sales.
Consumption is the key to supporting the US economy, which is why concerns about the economic downturn in the winter have increased.
The mixed performance of the major banks did not empower the stock market.
JPMorgan Chase posted Q4 net earnings and sales that exceeded market expectations, but Citigroup’s sales were lower than expected.
Citigroup shares are falling more than 3% in the early stage and JP Morgan shares are also weak.
Furthermore, it is also a burden that European countries, including Germany and France, further tighten the blockade or continue to discuss ways to strengthen it. The Corona 19 situation is not calming down yet, as is the spread of the mutant virus around the world.
However, the fact that US Treasury yields fell on the day due to slow economic indicators is seen as a factor in alleviating the stock market turmoil. The recent rise in US interest rates added to the valuation burden, primarily on high-growth tech stocks.
Other indicators published on this day were mixed.
The Federal Reserve Bank of New York announced that the Empire State Index in January fell to 3.5 from 4.9 last month. It did not meet the market forecast of 6.0.
On the other hand, the Federal Reserve System (Fed and Fed) announced in December of last year that industrial production increased 1.6% (seasonal adjustment) compared to the previous month. It far exceeded the experts’ estimate of 0.5%.
The Labor Ministry announced that in December the producer price index (PPI) rose 0.3% compared to the previous month. It did not meet the market estimate of 0.4%.
New York stock market experts have also started to mention the risk that the Biden administration’s stimulus package will end in taxes.
BK Asset Management Director Boris Schlossberg said: “The market price response (for stimulus packages) appears to be a ‘news sell’ movement.”
James Knightley, ING’s global chief economist, said: “Biden suggested that bridging the fiscal loophole would help restore government finances, but with sovereign debt that exceeds 100% of GDP, sometime corporate and income taxes and capital Increase in income tax will be inevitable. “
The stock markets of the main European countries are in a downtrend. The pan-European Stoxx 600 Index fell 0.84%.
International oil prices also fell. February West Texas Crude (WTI) prices moved 1.31% to $ 52.87, 1.31% lower than the previous trading day, while Brent oil fell 1.6% at $ 55.55.
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