US: Wall Street closes lower as surging Covid-19 cases offset vaccine hope

[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 spiralling Covid-19 pandemic.

Stay-at-home plays such as Zoom Video Communications and Netflix, 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 programmes at the Federal Reserve to expire at the end of the year, saying the US$455 billion allocated last spring under the Cares act should be returned to Congress to be reallocated as grants for small companies.

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The decision to pull the plug on lending programmes deemed essential by the central bank comes at a time of spiralling 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," Mr 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 hospitalisations to soar by 50 per cent and have prompted a new round of school and businesses closures, curfews and social distancing restrictions, hobbling economic recovery from the deepest recession since the Great Depression.

In the latest development in the race to develop a vaccine, Pfizer has applied to the US Food and Drug Administration for emergency use authorisation of its Covid-19 vaccine, the first application of its kind in the battle against the disease. The drugmaker's shares rose 1.4 per cent, and provided the biggest lift to the S&P 500.

The Dow Jones Industrial Average fell 219.75 points or 0.75 per cent to 29,263.48, the S&P 500 lost 24.33 points or 0.68 per cent to 3,557.54 and the Nasdaq Composite dropped 49.74 points or 0.42 per cent to 11,854.97.

Of the 11 major sectors in the S&P 500, only utilities eked out a gain by closing bell. Tech and industrials suffered the largest percentage losses on the day.

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

Gilead Sciences shed 0.9 per cent as a World Health Organization panel advised against use of the company's Covid-19 treatment remdesivir, citing lack of evidence the drug improves survival or reduces the need for ventilation.

Declining issues outnumbered advancing ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favoured advancers.

The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq Composite recorded 122 new highs and 10 new lows.

Volume on US exchanges was 10.69 billion shares, compared with the 10.70 billion average over the last 20 trading days.

REUTERS