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US Stocks Mostly Lower; Nasdaq Record 11/25 16:01
Stocks gave back some of their recent gains Wednesday as a batch of
discouraging economic data prompted investors to take a pause a day after the
market's record-setting climb.
(AP) -- Stocks gave back some of their recent gains Wednesday as a batch of
discouraging economic data prompted investors to take a pause a day after the
market's record-setting climb.
The S&P 500 dropped 0.2% a day after setting an all-time high. The Dow Jones
Industrial Average slipped below 30,000, a day after crossing that milestone
for the first time. Industrial, energy and health care companies accounted for
much of the decline. Technology companies rose, driving the Nasdaq composite to
a record high.
The selling followed reports showing the number of Americans seeking
unemployment aid jumped last week to the highest level in more than a month. A
separate report showed consumer spending posted the weakest gain since April.
Despite the pullback, Wall Street closed up shop for the Thanksgiving
holiday with the benchmark S&P 500 is still up 11% this month.
"The market overall has reached by most standards what we call overbought
conditions, and that typically suggests that the market would need to digest
the gains, perhaps pause a bit, and consolidate," said Quincy Krosby, chief
market strategist at Prudential Financial.
The S&P 500 fell 5.76 points to 3,629.65. The Dow gave up 173.77 points, or
0.6%, to 29,872.47. The tech-heavy Nasdaq gained 57.62 points, or 0.5%, to
12,094.40. The index, which is on a three-day winning streak, last hit an
all-time high on Sept. 2. The Russell 2000 index of smaller companies fell 8.51
points, or 0.5%, to 1,845.02.
Stocks have been pushing higher this month as investors have grown more
hopeful that the development of coronavirus vaccines and treatments will help
pave the way for the economy to recover next year.
This week, traders have also been encouraged by signs that the transition of
power in the U.S. to President-elect Joe Biden has begun. Wall Street is also
welcoming Biden's selection of former Fed chair Janet Yellen as treasury
secretary.
Encouraging study results this month from drugmakers working on coronavirus
vaccines and treatments have tempered lingering concerns over rising virus
cases in the U.S., as well as in Asia and other parts of the world, and new
government restrictions on businesses aimed at limiting the spread.
"The general themes are still intact, the hope for a vaccine that will
herald a return to normalcy at some point in 2021," said Greg McBride, chief
financial analyst at Bankrate.com.
Still, signs that the pandemic continues to weigh on the economy remain in
the forefront. On Wednesday, the government said the number of Americans
applying for unemployment benefits rose last week to 778,000, the highest level
in five weeks.
Other data painted a similarly discouraging economic picture. The Commerce
Department said U.S. consumer spending, the primary driver of the economy, rose
by a sluggish 0.5% in October, the weakest gain since April when the pandemic
first erupted. At the same time, the government said that income, which
provides the fuel for consumer spending, fell 0.7% in October.
Though financial markets continue making gains, hardship from the economic
slump is still growing, McBride said, and both small businesses and consumers
are "sorely in need" of additional financial stimulus.
The downbeat economic reports spurred the rally in technology stocks, which
traders have consistently bet on this year. Big Tech names like Apple,
Microsoft and Amazon have been favored because the companies tend to have
strong balance sheets and are expected to continue doing well once the pandemic
subsides.
"This is a recurring theme in the market whenever there's a concern about
growth expectations," Krosby said.
Treasury yields were mixed after mostly moving lower in the early going, a
sign of caution in the market. The yield on the benchmark 10-year Treasury rose
to 0.88% from 0.87% late Tuesday.
Gap led the way lower in the S&P 500, falling 19.6%, after the clothing
retailer's third-quarter results fell short of Wall Street's forecasts.
Nordstrom jumped 11.6% after the department store chain's earnings improved
in the third quarter, even as sales missed analysts' forecasts.
Traders bid HP shares 2.3% higher after the company delivered a solid
quarterly report card.
U.S. markets will be closed Thursday for the Thanksgiving holiday. They will
be open for half the day on Friday, closing at 1 p.m. Eastern.
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