Wall Street ends lower but crude advances as Senate weighs expanded stimulus

All three major US stock indexes oscillated as Wall Street loses ground December 29, 2020, retreating from intraday highs. — Reuters pic
All three major US stock indexes oscillated as Wall Street loses ground December 29, 2020, retreating from intraday highs. — Reuters pic

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NEW YORK, Dec 30 — Wall Street lost ground yesterday, retreating from intraday highs, while oil prices gained ground as investors looked to Washington for signs that an enhanced stimulus package would pass a US Senate vote.

All three major US stock indexes oscillated, at one point following the MSCI World Stocks index to record intraday highs, but ended the session in negative territory as market participants balanced near-term challenges with longer-term hopes for economic recovery and a return to healthy demand.

Light trading volume in a holiday-shortened week can fuel market volatility.

“(It's) the kind of day where you don't have a full team on the bench, so it doesn't take much to move things around,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. “It is easy to get things snowballing this entire week, so you have to be careful.”

The US House of Representatives voted on Monday to meet President Donald Trump's demand for US$2,000 direct payments, an increase from originally approved US$600 (RM2,429), to Americans as part of the recently signed fiscal relief bill, sending the measure to the Republican-controlled Senate.

Senate Majority Leader Mitch McConnell blocked an effort to approve the direct payments by unanimous consent, but said the chamber would address the increased stimulus cheques this week.

With upcoming US Senate runoff elections in Georgia, the size of direct payment cheques Americans receive could be a sensitive topic. The elections will determine which party controls the Senate.

“This probably the most political issue of the year because it could cost the Republicans the Senate, if voters feel they blocked it,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York, adding “there will probably be some movement on it and that would be positive for the market.”

Vaccine trials and distribution are gathering momentum around the world as global Covid-19 cases surpass 81 million and deaths approach 1.8 million. In the United States, there have been more than 19 million cumulative cases and nearly 335,000 deaths.

The Dow Jones Industrial Average fell 68.3 points, or 0.22 per cent, to 30,335.67, the S&P 500 lost 8.32 points, or 0.22 per cent, to 3,727.04 and the Nasdaq Composite dropped 49.20 points, or 0.38 per cent, to 12,850.22.

European stocks extended their year-end rally to close at a 10-month high in anticipation of fresh stimulus and as the European Union vaccination program got under way.

The pan-European Stoxx 600 index rose 0.76 per cent and MSCI's gauge of stocks across the globe gained 0.33 per cent.

Emerging market stocks rose 1.12 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.07 per cent higher, while Japan's Nikkei rose 2.66 per cent.

Crude prices advanced on hopes that pandemic aid could boost demand and spur economic growth.

US crude rose 0.8 per cent to settle at US$48 per barrel and Brent settled at US$51.09 per barrel, up 0.45 per cent on the day.

US Treasury yields were essentially flat in thin trading, as investors awaited the Senate's response to the US$2,000 stimulus cheque approved by the House.

Benchmark 10-year notes last rose 1/32 in price to yield 0.9314 per cent, from 0.933 per cent late on Monday.

The 30-year bond last rose 1/32 in price to yield 1.6683 per cent, from 1.669 per cent late on Monday.

The US dollar dipped to a two-year low against the euro and riskier currencies gained ground on the Brexit trade deal and prospects of increased fiscal aid.

The US dollar index fell 0.37 per cent, with the euro up 0.29 per cent to US$1.225.

The Japanese yen strengthened 0.26 per cent versus the greenback at 103.54 per US dollar, while Sterling was last trading at US$1.3501, up 0.39 per cent on the day.

Gold prices advanced as the dropping dollar bolstered the safe-haven metal's appeal ahead of the Senate's vote on the higher stimulus payments.

Spot gold added 0.4 per cent to US $1,878.51 an ounce. — Reuters

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