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Wall St lower amid stimulus, jobs news

Sinead Carew
·3-min read

Wall Street has closed lower after making a U-turn toward the end of the session as reports emerged about US President-elect Joe Biden's pandemic aid proposal following earlier data that showed a weakening labour market.

The Labor Department's weekly jobless report showed the number of Americans filing first-time claims for unemployment benefits increased more than expected last week, underscoring the impact of a resurgence in COVID-19 infections.

While the S&P 500 lost a lot of steam toward the end of the day, it spent most of the session in positive territory as investors counted on Biden unveiling on Thursday evening a stimulus plan that could exceed $US1.5 trillion.

"There's a tug-of-war going on between the prospects for further fiscal stimulus, as a result of Democratic control of the Senate, and a jobs market that has a long way to go before it heals," said Emily Roland, co-chief investment strategist at John Hancock Investment Management. "You have these competing forces going on which are keeping markets range bound."

But Roland noted that disappointing jobs data could provide "further fodder for Biden to potentially market this plan".

"Everybody's waiting to hear the details ... Whether it's $US1 trillion or $US2 trillion, that's a massive amount of fiscal stimulus," she said.

Citing two people familiar with the plans, The New York Times reported that Biden is expected on Thursday to unveil a $US1.9 trillion spending package.

After both touched fresh record highs earlier in the session, the Dow Jones Industrial Average finished down 68.95 points, or 0.22 per cent, at 30,991.52 while the Nasdaq Composite dropped 16.31 points, or 0.12 per cent, to 13,112.64.

The S&P 500 lost 14.3 points, or 0.38 per cent, to close at 3,795.54.

Earlier investors had seemed reassured after US Federal Reserve Chair Jerome Powell said an interest rate hike would not be coming time soon and pushed back against suggestions that it might taper bond purchases any time soon.

Of the 11 major S&P sectors, only four closed higher with economically sensitive energy, up three per cent, showing the biggest percentage gains as oil prices rose.

The biggest percentage decliner on the day was the information technology sector.

The domestically focused small-cap Russell 2000 index closed up two per cent, while the Dow Jones Transports index ended up one per cent after both sectors, which are seen as big beneficiaries of stimulus, scaled record highs during the day.

This was after Donald Trump became the first president in US history to be impeached twice when the House voted 232-197 on Wednesday to charge him with inciting riots at the Capitol.

The Philadelphia semiconductor index also hit a record high with a big boost from Taiwan Semiconductor Manufacturing Co Ltd. The chip manufacturer's US shares closed up five per cent after it announced its best-ever quarterly profit and raised revenue and capital spending estimates.

Investors were waiting for the earnings season to kick into full swing with results from JPMorgan, Citigroup and Wells Fargo slated for Friday.

Advancing issues outnumbered declining ones on the NYSE by a 2.24-to-1 ratio; on Nasdaq, a 2.51-to-1 ratio favoured advancers.

The S&P 500 posted 49 new 52-week highs and no new lows; the Nasdaq Composite recorded 367 new highs and three new lows.

On US exchanges 14.37 billion shares changed hands compared with the 12.54 billion average for the last 20 sessions.